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101st Constitution Amendment Act

May 01, 2020 by ConsultEase Administrator in GST Compliances

Table of Contents

Sec 1: Short title and commencement.

(1) This Act may be called the Constitution (One Hundred and First Amendment) Act, 2016.

(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the commencement of that provision.

Sec 2: Insertion of new article 246A

1. After article 246 of the Constitution, the following article shall be inserted, namely:—

“246A. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have the 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.

Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council.’’.

Sec 3: Amendment of article 248

In article 248 of the Constitution, in clause (1), for the word “Parliament”, the words, figures, and letter “Subject to article 246A, Parliament” shall be substituted.

Sec 4: Amendment of article 249.

In article 249 of the Constitution, in clause (1), after the words “with respect to”, the words, figures, and letter” goods and services tax provided under article 246A or” shall be inserted.

Sec 5: Amendment of article 250

In article 250 of the Constitution, in clause (1), after the words “with respect to”, the words, figures, and letter” goods and services tax provided under article 246A or” shall be inserted.

Sec 6: Amendment of article 268

In article 268 of the Constitution, in clause (1), the words “and such duties of excise on medicinal and toilet preparations” shall be omitted.

Sec 7: The omission of article 268A.

Article 268A of the Constitution, as inserted by section 2 of the Constitution (Eighty-eighth Amendment) Act, 2003 shall be omitted.

Sec 8: Amendment of article 269.

In article 269 of the Constitution, in clause (1), after the words “consignment of goods”, the words, figures and letter” except as provided in article 269A” shall be inserted.

Sec 9: Insertion of new article 269A.

After article 269 of the Constitution, the following article shall be inserted, namely:—

‘‘269A. (1) Goods and services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council.

Explanation.—For the purposes of this clause, the supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be the supply of goods, or of services, or both in the course of inter-State trade or commerce.

2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India.

3) Where an amount collected tax levied under clause (1) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India.

4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State.

5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.’’.

Related Topic:
101st Constitution Amendment Act, 2016

Sec 10: Amendment of article 270.

In article 270 of the Constitution,—

(i) In clause (1), for the words, figures and letter” articles 268, 268A and 269″, the words, figures and letter “articles 268, 269 and 269A” shall be substituted;

(ii) After clause(1), the following clauses shall be inserted, namely:—

‘‘(1A)The tax collected by the Union under clause (1) of article 246A shall also be distributed between the Union and the States in the manner provided in clause(2).

(1B)The tax levied and collected by the Union under clause(2) of article 246A and article 269A, which has been used for payment of the tax levied by the Union under clause (1) of article 246A, and the amount apportioned to the Union under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2).’’.

Sec 11: Amendment of article 271.

In article 271 of the Constitution, after the words ‘‘in those articles’’, the words, figures and letter ‘‘except the goods and services tax under article 246A,’’ shall be inserted

Sec 12: Insertion of new article 279A.Goods and Services Tax Council.

After article 279 of the Constitution, the following article shall be inserted, namely:—

‘‘279A. (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.

2) The Goods and Services Tax Council shall consist of the following members, namely:—the Union Finance Minister…………………… Chairperson;

(a) the Union Minister of State in charge of Revenue or Finance…………….. Member;

(b) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government. Members.

3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as may be, choose on amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.

4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—

(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;

(b) the goods and services that may be subjected to, or exempted from the goods and services tax;

(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply;

(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;

(e) the rates including floor rates with bands of goods and services tax;

(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;

(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand; and

(h) any other matter relating to the goods and services tax, as the Council may decide.

5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high-speed diesel, motor spirit (commonly known as petrol), natural gas, and aviation turbine fuel.

6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services.

7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.

8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—

(a) the vote of the Central Government shall have a weightage of one- third of the total votes cast, and

(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—

(a) any vacancy in, or any defect in, the constitution of the Council; or

(b)any defect in the appointment of a person as a Member of the Council; or

11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute—

(a) between the Government of India and one or more States; or

(b) between the Government of India and any State or States on one side and one or more other States on the other side; or

Sec 13: Amendment of article 286.

In article 286 of the Constitution,—

(i) in clause(1),—

(A) for the words “the sale or purchase of goods where such sale or purchase takes place”, the words “the supply of goods or of services or both, where such supply takes place “shall be substituted;

(B) in sub-clause (b), for the word “goods”, at both the places where it occurs, the words “goods or services or both” shall be substituted;

(ii) in clause (2), for the words “sale or purchase of goods takes place”, the words” supply of goods or of services or both “shall be substituted;

(iii) clause (3) shall be omitted.

Sec 14: Amendment of article 366.

In article 366 of the Constitution,—

(i) after clause(12), the following clause shall be inserted, namely:—

‘(12A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;’;

(ii) after clause (26), the following clauses shall be inserted, namely:— ‘(26A) “Services” means anything other than goods;

(26B) “State” with reference to articles 246A,268,269,269A, and article 279A includes a Union territory with Legislature;’.

Sec 15: Amendment of article 368

In article 368 of the Constitution, in clause (2), in the proviso, in clause (a), for the words and figures “article 162 or article 241”, the words, figures and letter“ article 162, article 241 or article 279A” shall be substituted.

Sec 16: Amendment of the Sixth Schedule.

In the Sixth Schedule to the Constitution, in paragraph 8, in sub-paragraph (3),—

(i) in clause (c), the word “and” occurring at the end shall be omitted;

(ii) in clause(d), the word “and” shall be inserted at the end

(iii) after clause (d), the following clause shall be inserted, namely:—

“(e) taxes on entertainment and amusements.”.

Sec 17: Amendment of Seventh Schedule.

In the Seventh Schedule to the Constitution,—

(a) In List I—UnionList,—

(i) for entry 84, the following entry shall be substituted, namely:—

“84. Duties of excise on the following goods manufactured or produced in India, namely:—

Petroleum crude;
high-speed diesel;
motor spirit (commonly known as petrol);
natural gas;
aviation turbine fuel; and
tobacco and tobacco products.”;

(ii) entries 92 and 92C shall be omitted;

(b) In List II—StateList,—

entry 52 shall be omitted;
for entry 54, the following entry shall be substituted, namely:—

“54.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 the sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods.”;

entry 55 shall be omitted;
for entry 62, the following entry shall be substituted, namely:—

“62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.”.

Sec 18: Compensation to States for loss of revenue on account of the introduction of goods and services tax.

Parliament shall, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for a period of five years.

Sec 19: Transitional provisions.

Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier.

Sec 20: President to remove difficulties.

(1) If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation other transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may,

by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty.

Provided that no such order shall be made after the expiry of three years from the date of such assent

(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament.

Major changes introduced by 101st Constitutional amendment Act

As we shall see, the CA Act inserts, repeals, and amends certain parts of the Constitution. Inserted are the Articles 246A, 269A, and 279A; repealed is the Article 268A; amended are Articles 248, 249, 250, 268, 269, 270, 271, 286, 366, and 279A. Besides that the Sixth and the Seventh Schedules, too, have been amended.

The CA Act has brought drastic changes in the federal taxing powers of the State; it has introduced a couple of Articles, amended a few, and done away with a few more. At a glance we can appreciate the changes:

	Before Amendment	After Amendment	Impact
246A	Not existing	Introduced	Special provision on goods and services tax conferring simultaneous legislative powers on both the Union and the States.
248	Residuary power	Amended	The Union’s residuary legislative power is subjected to Article 246A.
249	Power of Parliament to legislate regarding a matter in the State List in the national interest	Amended	It gives power to the Parliament to enact any law applicable to states on the matters mentioned even in states list. GST, no mentioned in States list, now explicitly mentioned.
250	Power of Parliament to legislate regarding any matter in the State List if a Proclamation of Emergency is in operation	Amended	It has a similar impact as does the amended Article 249.
268	Duties levied by the Union but collected and appropriated by the States	Amended	Additional Duties of Excise (Medicinal and toilet preparations) Stand subsumed into GST.
268A	Service tax levied by Union and collected and appropriated by the Union and the States:	Omitted	Service tax has been subsumed into GST. So Entry No. 92C of List-I too stands omitted.
269	Taxes levied and collected by the Union but assigned to the States	Amended	The arrangement under Article 269 is subjected to Article 269A, a new provision.
269A	Not existing	Inserted	Levy and collection of goods and services tax during inter-State trade or commerce. The power to levy and collect GST during inter-State trade or commerce is vested with the Government of India. The taxes so collected will be apportioned between the Union & the States in the manner prescribed.
270	Taxes levied and distributed between the Union and the States.	Amended	Now Article 268A an Entry No. 92C of List-I stand omitted; so service tax is subsumed under GST. So in Article 270, a reference to Article 268A has been omitted, and a new reference to Article 269A for levy of GST for Inter-state transactions has been introduced.
271	Surcharge on certain duties and taxes for purposes of the Union	Amended	Parliament’s powers to levy an additional surcharge on Union taxes under Article 271 now stands amended: Parliament can levy no additional surcharge on GST.
279A	Not existing	Inserted	Provision for creating the GST Council, a constitutional body.
286	Restrictions on the imposition of tax on the sale or purchase of goods	Amended	First, the word “sales” is replaced with “supply” and the word “goods” is replaced with “goods or services or both”. States cannot legislate on the supply of goods or services if such supply is outside their state or is in the course of import or export. Originally, States could not levy and collect tax on specific Inter-state transactions. With omitting Clause (3), now even inter-state transactions of that nature would attract GST.
366.	Definition	Inserted	The definitions have been added to the Constitution: (12A) Goods and Services Tax; (26A) Services; and (26B) State.
368	Power of Parliament to amend the Constitution and procedure therefor	Amended	As regards provisions and laws regarding the GST Council, Parliament has been vested with the power to amend the Constitution.
Sixth Schedule	Provisions on the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura, and Mizoram 8. Powers to assess and collect land revenue and to impose taxes.	Amended	It concerns powers to assess and collect land revenue and to impose taxes in the Tribal Areas of a few States.

Seventh Schedule

List I: Entry 84	Barring those excluded, the Union could levy excise duty on all other goods, including tobacco, manufactured or produced in India. The excluded ones are these: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp, and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance in subparagraph (b).	Amended	Now excise duty is levied only on the enumerated items: (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”
Entry 92	Taxes on the sale or purchase of newspapers and on advertisements published.	Omitted	Now, taxes on the sale or purchase of newspapers and on advertisements published therein have been subsumed into GST.
Entry 92C	Taxes on services	Omitted	Service tax has also been subsumed into GST.
List II Entry 52	Taxes on the entry of goods into a local area for consumption, use, or sale therein.	Omitted	Purchase tax, too, has been subsumed into GST.
Entry 54	Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I. (Entry 92A of List I concern inter-State trade or commerce.)	Amended	Now the taxes are confined to the sale of petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel, and alcoholic liquor for human consumption. But excluded is the sale in the course of inter-State trade or commerce. (Now the sale or purchase of goods stands to subsume by GST)
Entry 55	Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television.	Omitted	Taxes on advertisements other than advertisements broadcast by radio or television has also been subsumed into GST.
Entry 62	Taxes on luxuries, including taxes on entertainments, amusements, betting, and gambling.	Amended	(a) Taxes on Luxury betting and gambling have been subsumed into GST. (b) Right to levy Tax on entertainments and amusements has been restricted to Panchayats, municipalities, Regional Councils, and District Councils.