Question

Consider the following statements regarding the 101st Constitutional Amendment:

I. Article 246A was introduced, empowering Parliament and State Legislatures to levy Goods and Services Tax.

II. The GST Council was established by an order of the President under Article 279A.

III. Article 268A, pertaining to service tax levied by the Union but collected and appropriated by the States, was repealed.

Which of the above statements are correct?

• A. I, III only
• B. II only
• C. I, II, III
• D. I, II only

Answer 1

Answer:

C. I, II, III

The 101st Constitutional Amendment Act, 2016

• This amendment act is a landmark legislation in India's indirect tax regime. It paved the way for the implementation of the Goods and Services Tax (GST).

• Statement I is correct: Article 246A was inserted by the 101st Amendment. This article grants concurrent powers to both the Parliament and the State Legislatures to make laws with respect to Goods and Services Tax (GST) imposed by the Union or by the State. Specifically, it empowers Parliament to legislate on GST where the supply of goods, or of services, or both, takes place in the course of inter-state trade or commerce, and empowers the State Legislatures to legislate on GST where the supply of goods, or of services, or both, takes place within that State.

• Statement II is correct: The GST Council was established by virtue of Article 279A, which was also introduced by the 101st Amendment Act. The President of India is empowered to constitute this council. The GST Council is a constitutional body that makes recommendations to the Union and the State Governments on various aspects of GST. It comprises the Union Finance Minister as its Chairman, the Union Minister of State for Revenue, and the Finance Ministers of all States and Union Territories with legislature as members.

• Statement III is correct: Article 268A of the Constitution, which dealt with the levy and collection of service tax by the Union but its appropriation by the Union and the States, was repealed by the 101st Amendment Act. This was necessary to subsume service tax into the GST. The revenue from service tax was previously shared between the Centre and the States, but with GST, this distinction was abolished.

Key Background Information:

• The idea of GST in India was first discussed in the '1991's' Indian economic reforms.

• The path to GST involved several steps, including the setting up of the Empowered Committee of State Finance Ministers and the introduction of the Constitution (115th Amendment) Bill in 2014.

• The 101st Constitutional Amendment Act received Presidential assent on September 8, 2016, and became effective from July 1, 2017, the date when GST was rolled out across India.