GST was first levied by France in 1954.

Out of 195 countries in the world,

almost 160 countries have adopted the concept of GST i.e THE GOODS AND
SERVICES TAX. Taxation is one of the vital component of development of any
country. The revenue from taxation is used to finance public goods and
services such as infrastructure, sanitation,
transportation and all other amenities, which
are provided by the government.

Taxes in India are levied by the Central Government, the State Governments
and some local authorities such as the Municipality, which levy minor taxes.
There are two types of taxes which are levied in India and they are; Direct tax,
which is levied directly to an individual's income in the form of Income Tax and
Indirect tax, that is paid indirectly by the final consumer of goods and services
while paying for purchase of goods or for enjoying services.

Constitution of India is the foundation and source of powers to legislate all

laws in India. Article 265 of the Constitution of India lays down that no tax shall
be levied and collected in India only by the authority of law. Article 246 of the
Indian Constitution, distributes legislative powers including taxation, between
the Parliament of India and the State Legislatures.

GST was introduced as 101st Constitutional Amendment Act (The 122nd

Amendment Bill) and a new Article 246A was introduced.

Article 246A

(1) Notwithstanding anything contained in articles 246 and 254, Parliament,

and, subject to clause (2), the Legislature of every State, have power to
make laws with respect to goods and services tax imposed by the Union or
by such State.
(2) Parliament has exclusive power to make laws with respect to goods and
services tax where the supply of goods, or of services, or both takes place
in the course of inter-State trade or commerce.

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Notable Points from Article 246A

 Both Union and States in India now have “concurrent powers” to make
law with respect to goods & services.

 The intra-state trade now comes under the jurisdiction of both centre
and state; while inter-state trade and commerce is “exclusively” under
central government jurisdiction.

GST is consumption or destination based tax, levied on the basis of the

“Destination principle.” It is a comprehensive tax regime covering both goods
and services, and be collected on value-added at each stage of the supply
chain.

Indirect taxes can be either origin based or destination based. Origin based tax
(also known as production tax) is levied where goods or services are produced.
Destination based tax (consumption tax) are levied where goods and services
are consumed.

Simply put, Goods and Services Tax is a tax levied on goods and services
imposed at each point of supply. Thus GST will be a single comprehensive
integrated indirect tax on pure value addition at each stage.

Such GST is on entire goods and services, except some exempted class of goods
or services or a negative list of goods and services on which GST is not levied.
GST is a national level tax based on value added principle just like State level
VAT which was levied as tax on sale of intra-state goods Under the previous
regime taxable event for various taxes were different. For example, for excise
duty the taxable event was manufacture or production of goods in India.
Similarly, for services the taxable event was when a service was provided or
agreed to be provided. Under CST and VAT it was sale of goods. Thus, all this
led to lot of confusion in determining taxes to be paid. To replace such multiple
taxable events, GST has brought a single and uniform taxable event, which is,
supply and tax will accrue to the taxing authority, which has jurisdiction over
the place of consumption and will be the place of supply in most cases.

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 Origin of GST in India

Referring to the archives of GST, the idea of national GST was mooted by
KELKAR TASK FORCE in the year 2004. In 2000, Vajpayee Government started
discussion on GST by setting up an empowered committee headed by ASIM
DAS GUPTA (The then Finance Minister of West Bengal).

After a lot of discussions and passing of bills through the houses of the
parliament, the following bills got assent of the President on 12th April, 2017.

Central GST legislations:-

(a) Central Goods and Services Tax Act, 2017

(b) Union Territory Goods and Services Tax Act, 2017
(c) Integrated Union Territory Goods and Services Tax Act, 2017
(d) GST (Compensation to States) Act, 2017

All the above said legislations came into effect from 1st July, 2017.

(a) Central Goods and Services Tax– Levied and collected by the Central
Government.
(b) State Goods and Services Tax – Levied and collected by State
Government
(c) Union Territory Goods and Services Tax – Levied and collected by Union
Territories on intra – UT supplies of taxable goods/services
(d) Integrated Goods and Services Tax – Inter-State supply of taxable
goods/services will be subject to IGST.
(e) Goods and Services Tax (Compensation to States) Act, 2017- An Act to
provide for compensation to the States for the loss of revenue arising on
account of implementation of the goods and services tax in pursuance of
the provisions of the Constitution (One Hundred and First Amendment)
Act, 2016.

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 A note on GST Council

Article 274A of the Constitution of India empowers the President of India to

constitute a joint forum of the Centre and the States namely, Goods and
Services Tax Council (GST Council). GST Council came into force with effect
from 12th September 2016. President Constituted the GST Council on 15th
September, 2016. GST Council shall consist of the following members.

1. Chairperson – Union Finance Minister (As of now Shri Arun Jaitley)

2. Members – State Finance Ministers or any other Minister nominated by
the State Government

Tax credit

GST offers comprehensive and continuous chain of tax credits from the
Producer’s point/Service Provider’s point to retailer’s level/consumer’s level
thereby taxing only the value added at each stage of supply chain.

Ultimate Burden on consumers

Since GST permits availing of input credit at each stage, hence it can be noted
that the final burden of GST will be borne by consumer as it is charged by the
last supplier with set off benefits at all pervious stages.

No cascading effects of taxes

As already discussed, the tax structure (before implementation of GST) had

number of indirect taxes collected both by State and Central Governments.

Due to such multiple taxes, there was cascading effect overall and double
taxation. GST now subsumes all the past indirect taxes and will thus, facilitate
seamless flow of credit resolving the problem of double taxation and cascading
effect of taxes. This will check cost of goods along with making compliance
easy and bringing stability in the government’s revenue.

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 Taxes to be subsumed in GST

CENTRAL TAXES STATE TAXES

Central Excise Duty State VAT/Sales Tax

Additional duties of excise Central Sales Tax

Excise duty under Medicinal and Entertainment Tax (Other than

Toiletries Preparation Act those levied by local bodies)

Additional duties of customs Luxury Tax

Service tax Taxes on lottery, betting and

gambling

Surcharges and Cesses Surcharges and Cesses

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