Amendment of the Constitution and Other Legislative Requirements :
(a) Constitution (One Hundred and Twenty Second) Amendment Bill, 2014
To address all these and other issues, a Constitution Amendment Bill was introduced in the Lok Sabha in December, 2014 and the Bill (122nd Amendment Bill) has since been passed by the Lok Sabha (May, 2015). The Bill is currently under consideration of the Rajya Sabha.The salient features of the Bill are as under:
(i) The GST shall be levied on all goods and services except alcoholic liquor for human consumption
(ii)The tax shall be levied as dual GST separately by the Union and the States.
(iii) Parliament will have power to make laws with respect to GST imposed by the Union (CGST) and the State Legislatures will have power to make laws with respect to GST imposed by the States (SGST).
(iv) Parliament will have exclusive power to make laws with respect to GST where the supply of goods and/or services takes place in the course of inter-State trade or commerce (IGST).
(v) The Government of India (GoI) will have exclusive power to levy and collect GST on inter-State trade or commerce. This tax shall be apportioned between the Union and States on the recommendations of the GST Council by Parliament by law.
(vi) Petroleum & petroleum products would be subject to GST. [However, it has been decided that five products, viz. petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel would be kept out of the purview of GST in the initial years of implementation]. In the case of tobacco and tobacco products, the Centre alone would have the power to levy excise duty in addition to the GST.
(vii) Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or aMunicipality or a Regional Council or a District Council shall not be subsumed under GST. The local bodies of States could continue to levy such taxes.
(viii) Parliament may, by law, provide for compensation to States for revenue loss arising out of the implementation of the GST, based on the recommendations of the GST Council. Such compensation could be for a maximum period of 5 years.
(ix) A GST Council would be constituted comprising the Union Finance Minister (who will be the Chairman of the Council), the Minister of State (Revenue) and the State Finance/Taxation Ministers to recommend on
a. the taxes, cesses and surcharges to be subsumed under GST;
b. the goods and services that may be subjected to or exempted from the GST;
c. the date from which the specified petroleum products would be subject to GST;
d. model GST laws, principles of levy, apportionment of IGST and the principles that govern the place of supply;
e. the threshold limit of turnover below which the goods and services may be exempted from GST;
f. the rates including floor rates with bands of GST;
g. any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster; and
h. special provision with respect to the North-East States, J&K, Himachal Pradesh and Uttarkhand.
The mechanism of GST Council would ensure some degree of harmonization on different aspects of GST between the Centre and the States as well as among States. It is being specifically provided that the GST Council, in its discharge of various functions, shall be guided by the need for a harmonized structure of GST and for the development of a harmonized national market for goods and services.
As per the provisions of the Amendment Bill, every decision of the GST Council shall be taken by a majority of not less than 3/4th of the weighted votes of the Members present and voting. The vote of the Central Government shall have a weightage of 1/3rd of the votes cast and the votes of all the State Governments taken together shall have a weightage of 2/3rd of the total votes cast in the meeting. One half of the total number of members of the GST Council shall constitute the quorum at its meetings.
The GST Council may decide about the modalities to resolve disputes arising out of its recommendation.
The Constitution Amendment Bill is expected to be passed by the Rajya Sabha in the ensuing monsoon session of Parliament. After ratification of the amendment bill by 50% of State Legislatures and receipt of assent by the President, the process of enactment would be complete.
(b) Other Legislative Requirements
Suitable legislation for the levy of GST (Central GST Bill, Integrated GST Bill and State GST Bills) drawing powers from the Constitution can be introduced in Parliament or the State Legislatures only after the enactment of the Constitution Amendment Bill. Unlike the Constitutional Amendment which requires 2/3rd majority, the GST Bills
would need to be passed by a simple majority. Obviously, the levy of the tax can commence only after the GST law has been enacted by the respective Legislatures. Also, unlike the State VAT, the date of commencement of this levy would need to be synchronized across the Centre and the States. This is because the IGST model cannot function effectively unless the Centre and all the States participate simultaneously.