Maharashtra government has issued a trade circular stating that it will not adopt goods and service tax (GST) circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) but will issue its own following study of such circular.
Article 246A has overridden Article 254 along with article 246 so far as state Goods and Services Tax is concerned? This is classic case of state law over riding central law.
Article 246A reads as under :
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.
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.
It may be recalled that above article 246A which was inserted into the Constitution of India & is the most important operative provision for ensuring the implementation of GST across India. It has provided the legislative competence to the Centre and the States to make laws with respect to GST.
Since article 246A begins with a non-obstante clause which overrides Articles 246 and 254, for a better understanding of article 246A, one need to understand articles 246 and 254 also.
Article 246 clearly demarcates the subject matters where the Union and the States have their legislative competence and Article 254 deals with the issues of inconsistency or repugnancy of laws made by the Parliament and the State Legislatures.
Article 246(2) does not provide for concurrent levy of tax, it lists the subject matters where both the States and Centre have legislative capacity but the laws made by them are independent of one another. It does not apply concurrently on the same transaction.
On few occasions, co-existence of Central and State laws in a particular area or on the same subject matter may lead to problems because the Union or a State may encroach upon each other’s territory.
It may also arise because though there may not be any encroachment as such, still the two laws might conflict. Where the subject matter of the legislation in question falls within either the State List or the Union List only, the question that is to be decided with reference to legislative competence is whether the same is ultra vires or not. On the other hand, where the legislation passed by the Union and the States is on a subject matter of the concurrent list, the matter cannot be determined by applying the test of ultra vires because the hypothesis is that both the laws are constitutionally valid. Accordingly, test of repugnancy comes under such circumstances under article 254(2).
Because of adopting a dual GST model in India where a particular transaction is concurrently taxed both by the Union and a State/UT, a situation has arisen where the concurrent powers of legislation to both the Union and States/UTs are to be ensured.
Article 246A was therefore, inserted to confer concurrent taxing powers on the Union as well as the States including Union Territories with Legislature (Delhi and Puducherry) to make laws for levy of GST on every transaction of supply of goods or services or both. However, article 246A does not categorically provide that the laws made by the Union as well as the States with respect to GST will apply concurrently or simultaneously on the same transaction although the statement of Objects and Reasons clearly states that the Constitution is proposed to be amended to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States.
If for any reasons, the laws made by the Union and the State on the same subject matter of GST differ, how the test of inconsistency or repugnance will be applied considering the fact that Article 246A has overridden Article 254. Is the GST Council or any other authority legally competent to ensure that CGST and SGST/UTGST laws run consistently to achieve the principles of dual GST? The recent decisions of Maharastra refusing to recognise the circular is a beginning of another era of litigation and contingency in the country ?
Views & suggestions of the readers are invited.