Introduction

The Indian Constitution is the supreme law of the land, providing the framework for the governance of the country. One of the significant amendments made to the Constitution was the introduction of Article 269A. This article deals with the levy and collection of the Goods and Services Tax (GST) in the course of inter-state trade or commerce.

Understanding Article 269A

Article 269A was inserted into the Indian Constitution through the Constitution (One Hundred and First Amendment) Act, 2016. This amendment aimed to bring about a uniform tax structure across the country, replacing the previous complex system of multiple indirect taxes.

Under Article 269A, the Parliament has the power to make laws for the levy and collection of GST on supplies in the course of inter-state trade or commerce. This means that GST will be applicable when goods or services move from one state to another.

Levy and Collection of GST

Article 269A clarifies that the GST on inter-state supplies shall be levied and collected by the Government of India. The tax collected in this manner is known as the Integrated Goods and Services Tax (IGST). The IGST is a combination of the Central Goods and Services Tax (CGST) and the State Goods and Services Tax (SGST).

When goods or services are supplied from one state to another, the IGST will be levied by the Central Government, and the revenue will be shared between the Centre and the states in a manner prescribed by the Parliament. This ensures a fair distribution of tax revenue between the different levels of government.

Inter-State Trade or Commerce

Article 269A clarifies that the levy and collection of GST will apply only to supplies in the course of inter-state trade or commerce. But what exactly constitutes inter-state trade or commerce?

Inter-state trade or commerce refers to any sale, purchase, transfer, or exchange of goods or services that involves movement of goods or services from one state to another. It also includes the supply of goods or services to or from a Special Economic Zone (SEZ) or a Free Trade Zone (FTZ) located in a different state.

However, Article 269A does not apply to supplies made to or by the Central Government, a State Government, or any local authority. These supplies are exempt from the levy and collection of GST under this article.

Benefits of Article 269A

Article 269A and the introduction of the GST system have several benefits for the Indian economy:

1. Simplification: The GST system replaces multiple indirect taxes with a single tax, making the tax structure simpler and more transparent.
2. Elimination of Cascading Effect: GST eliminates the cascading effect of taxes, where taxes are levied on taxes, by allowing input tax credit across goods and services.
3. Uniform Tax Structure: GST brings about a uniform tax structure across the country, promoting ease of doing business and reducing compliance costs.
4. Promotion of Inter-State Trade: By ensuring a fair distribution of tax revenue between the Centre and the states, Article 269A promotes inter-state trade and commerce.
5. Boost to the Economy: The simplified tax structure and increased compliance are expected to boost economic growth and attract more investments.

Conclusion

Article 269A of the Indian Constitution plays a crucial role in the levy and collection of GST in the course of inter-state trade or commerce. It ensures a fair distribution of tax revenue between the Centre and the states, promotes a uniform tax structure, and simplifies the tax system. The introduction of GST and Article 269A is a significant step towards creating a more efficient and transparent indirect tax regime in India.