Centre may have to re-notify GST Constitutional Amendment Act; here’s why

The government may have to re-notify parts of the Constitutional Amendment Act for Goods and Service Tax (GST) since, the way the current Act reads, the central government now probably only has the powers to levy excise duty on petroleum products and tobacco. On September 16, the government notified 19 sections of the Act. 

According to experts, the centre can also rely on Entry 97 of List 1 to continue to levy excise duties – this reads ‘Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists’ and, initially, service tax was brought in through this entry.

The government may have to re-notify parts of the Constitutional Amendment Act for Goods and Service Tax (GST) since, the way the current Act reads, the central government now probably only has the powers to levy excise duty on petroleum products and tobacco. On September 16, the government notified 19 sections of the Act.

While petroleum products and tobacco were meant to be exempt from GST when it finally came into operation – and therefore subject to excise duty – changing entry 84 of the Union List with effect from September 16, 2016 implies the centre cannot levy excise duty on any other good other than petroleum and tobacco.

While Article 19 of the Constitutional Amendment could offer a way out since it exempts any existing taxes on goods or services ‘in force in any State immediately before the commencement of this Act’ for a period of one year, this seems to apply only to taxes in states and not excise duty – some tax experts, however, argue that this is a matter of interpretation and can be extended to excise duties as well.

According to experts, the centre can also rely on Entry 97 of List 1 to continue to levy excise duties – this reads ‘Any other matter not enumerated in List II or List III including any tax not mentioned in either of those Lists’ and, initially, service tax was brought in through this entry. The other option is to issue a clarification to say Article 17 of the Constitutional Amendment Act will not be brought into force till the GST comes into force.

Further this new notification has been issued under Section 1 and amazingly notifies date of effect of said section. Looks clumsy - what comes first , notification giving date of effect of power to issue notification or the notification itself. It seems that Section 1 could not have a date of effect to be notified by a notification. Secondly, what about the earlier notification which was issued last week. it was also issued under this section 1, taking powers from there. How come GST council notification was issued, by notifying date of Section 12 when Section 1 itself is being notified now.