BASIC CONCEPTS OF GST (PART- 14) – Constitutional Amendments


Amendment of Union List

List I of Seventh Schedule would stand amended as follows:

  • Entry 84 relating to excise duty would deal with duties of excise on the following goods manufactured or produced in India, namely:- (a) petroleum crude; (b) high speed diesel; (c) motor spirit (commonly known as petrol); (d) natural gas; (e) aviation turbine fuel; and (f) tobacco and tobacco products.

Petroleum products and tobacco will continue to attract excise duty. However, the Bill specifically provides that petroleum products might not attract GST. However, at a later stage the GST Council might decide to levy GST on petroleum products.

  • Entries 92 (Taxes on the sale or purchase of newspapers and on advertisements published therein) and 92C (Taxes on services, which was to be inserted from a date not yet notified) shall be omitted.

Amendment of State List

List II of Seventh Schedule would stand amended as follows:

  1. Entry 52 (Taxes on the entry of goods into a local area for consumption, use or sale therein) shall be omitted; and
  2. Entry 54 dealing with intra-State sales-tax/VAT shall be substituted and would deal with-
  • taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption,
  • but not including sale in the course of –
  • inter-State trade or commerce or
  • international trade or commerce of such goods.
  1. Entry 55 (Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television) shall be omitted.
  2. Entry 62, which deals with entertainment/amusement tax would be substituted, such that taxes on entertainments and amusements can be levied by a Panchayat or a Municipality or a Regional Council or a District Council.

The Bill provides that the import of goods or services will be deemed as supply of goods or services or both, in the course of inter-state trade or commerce and thus it will attract IGST (CGST plus SGST). Thus, import of goods will attract Basic Customs Duty and IGST, while import of services will attract IGST. Further, it appears that alcohol for human consumption will be kept outside the GST regime. Exclusion of the alcohol sector could mean that companies manufacturing alcohol may not be in a position to avail credit of GST paid by them on their procurements.

Additional tax on inter-State supply for transitional period

Clause 18 of 122nd Amendment Bill provides for additional tax on inter-state supply as follows-

  • an additional tax on supply of goods, not exceeding 1% in the course of inter State trade or commerce shall be levied and collected by the Government of India for a period of 2 years or such other period as the GSTC Council may recommend.
  • Such tax shall be assigned to the States.
  • The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates.
  • The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of this additional tax.
  • The Parliament may, by law, formulate the principles for determining the place of origin from where supply of goods take place in the course of inter State trade or commerce.

Amendment of Sixth Schedule – Entertainment tax, etc.

Sixth Schedule deals with provisions as to the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram. New Para 8(3)(e) empowers the District Council for an autonomous district to levy and collect taxes on entertainment and amusements.

Loss of Revenue / Compensation

Parliament may, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation or loss of revenue on implementation of the goods and services tax for such period which may extend to five years.

(To be continued…….)


By: Dr. Sanjiv Agarwal March 26, 2016

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