Part XII: Finance, Property, Contracts and Suits

Article 269A: Levy and collection of GST in course of inter-State trade or commerce

Original Article:

(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, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be 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 as 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.

Explanations:

Article 269A was introduced through the Constitution (One Hundred and First Amendment) Act, 2016, as part of India's Goods and Services Tax (GST) reform. It governs the levy and collection of GST on inter-State supplies of goods and services, ensuring equitable distribution of revenue between the Union and the States.

Clause-by-Clause Explanation:

Clause (1): Levy and Collection of GST

The Government of India levies and collects GST on inter-State trade and commerce. Parliament, based on the GST Council's recommendations, determines the apportionment of the collected tax.

Real-Life Example: A manufacturer in Karnataka sells goods to a retailer in Maharashtra. The GST collected is apportioned between the Union and the respective States based on Parliament's guidelines.

Clause (2): State Revenue Allocation

The revenue apportioned to States does not form part of the Consolidated Fund of India, ensuring direct allocation to the States.

Real-Life Example: GST collected from inter-State transactions involving an e-commerce platform operating in Tamil Nadu and shipping goods to Gujarat is directly allocated to these States without inclusion in the Union’s Consolidated Fund.

Clause (3) and (4): Offset Provisions

These clauses outline the exclusion of offset amounts from the Consolidated Fund of India or the State, maintaining transparency and accountability in GST transactions.

Real-Life Example: If a business in Punjab offsets its intra-State GST liabilities against inter-State GST credits, these offset amounts are excluded from the respective Consolidated Funds, ensuring accurate accounting.

Clause (5): Determining Place of Supply

Parliament determines principles for identifying the place of supply, crucial for assigning GST jurisdiction.

Real-Life Example: A software company based in Delhi provides digital services to a client in Kerala. Principles established by Parliament ensure that GST jurisdiction is clearly assigned to Kerala.

Historical Significance:

Article 269A represents a monumental shift in India's taxation system, replacing a fragmented indirect tax structure with a unified GST regime. It exemplifies cooperative federalism, balancing Union and State interests.

Real-Life Examples:

For example, an e-commerce transaction where goods are shipped from Karnataka to Tamil Nadu attracts GST under Article 269A. The tax collected is shared between the Union and the respective States.

Debates and Deliberations:

The introduction of Article 269A was extensively debated in Parliament during the passage of the GST Amendment. Members highlighted its potential to streamline tax collection while addressing concerns about its impact on State revenues.