Post date: Aug 9, 2016 9:50:37 AM
India is a Union of States, having Constitutional fiscal autonomy, granted to each of the States and commonly known as Federal State. At the same time there is a Parliament governing Fiscal autonomy/system also, for the Country as a single unit.
Our Constitution provides distribution of taxing powers separately to the Central Government, as well as, to all the State Governments. For this purpose in the seventh Schedule, Three separate list such as, List I or Union List, List II or State List, and Concurrent List have been provided.
Parliament has the Domain over the Taxing power given in List I.
While State Assemblies have the Domain over the Taxing power, as provided in List II.
All the Central Direct and Indirect Taxes are being governed, controlled and administered by the Central Government while, All the State Indirect Taxes are being governed, controlled and administered by the State Governments.
By the aforesaid constitutional proposition, there is a Parliamentary System/Domain for the purpose of Central Indirect Taxes as listed in List-I.
Meaning thereby, the Central Indirect Tax are being levied, charged and collected on All India basis, and there is no boarder barrier/limits across the States, for levy and charge of Central Indirect, and thus also granting or extending Input Tax Credit- even across the States as well.
Therefore for the purpose of Central Excise Duty and Service Tax, the Input Tax Credit facility is admissible to all the Manufacturing units, without any boarder barrier/limits of the States. In other words Central Excise or the Service Tax paid in any State, shall qualify for Input Tax Credit in any other State. Further Input Tax Credit facility, inter-alia among the Central Excise Duty and Service Tax is also admissible.
Whereas for the purpose of State VAT, Input Tax Credit facility is admissible to all the Selling/Manufacturing/Mining units, in course of sale, of such goods, within that respective State only.
Further, there is another, Central Indirect Tax for the purpose of Inter-State Sale of goods: commonly known as CST and is being governed by the CST Act 1956. Though it is Central Indirect Tax, but by the provisions, of our Constitution, as well as by the CST Act itself, the States are empowered to levy /charge and collect CST. Though it is a Central Tax, CST charged and collected, is assigned to that State revenue only, from where such inter-state sale of Goods has occasioned.
Though CST is a Central Indirect Tax: any CST Charged & collected , by any State: Input Tax Credit shall not be admissible to any other State.
Therefore, by the present Constitutional Provisions and Fiscal Autonomies to the States and the Center - Input Tax Credit among the Central Indirect Tax, including CST as well as on the VAT- inter-alia, are NOT admissible.
Therefore for implementing the GST, Constitutional amendments are essentially required,