How does GST differ from previous indirect tax systems?

1. Uniformity:

• Before GST: Multiple taxes (VAT, Service Tax, Excise Duty, CST, etc.) were levied at various stages by both central and state governments, leading to overlapping and cascading taxes.
• Under GST: A unified tax system eliminates cascading effects by integrating all indirect taxes into a single tax at the point of consumption.

2. Tax Structure:

• Before GST: Taxes were levied differently at each stage of production and distribution, with no seamless credit for taxes paid.
• Under GST: Input Tax Credit (ITC) ensures taxes paid at one stage can be offset against subsequent stages, avoiding duplication.

3. Centralized Administration:

• Before GST: Central and state taxes had separate compliance structures, increasing the compliance burden.
• Under GST: A centralized digital platform (GSTN) ensures a uniform and simpler compliance mechanism.

4. Interstate Trade:

• Before GST: CST and multiple entry/exit taxes made interstate trade costly and complex.
• Under GST: Integrated GST (IGST) simplifies interstate trade with a uniform tax mechanism.

5. Tax Base:

• Before GST: Different states had different VAT rates, and there were exemptions under excise laws.
• Under GST: A broader tax base applies uniformly across the country, ensuring equity.

Pros of GST

1. Elimination of Cascading Effect: GST eliminates tax-on-tax by allowing seamless ITC.
2. Ease of Doing Business: Uniform tax rates reduce complexity and enhance compliance.
3. Boost to Economic Growth: A unified market across India encourages free flow of goods and services.
4. Technology-Driven Compliance: The GST Network (GSTN) ensures transparency and efficient tax administration.
5. Reduction in Black Money: Mandatory invoicing and online tracking help curb tax evasion.
6. Encouragement of MSMEs: The composition scheme simplifies compliance for small businesses.

Cons of GST

1. Compliance Burden: Filing multiple GST returns (monthly and annual) can overwhelm small businesses.
2. Complexity for Small Businesses: Despite simplifications, smaller businesses may face difficulties adapting to technology-driven systems.
3. Higher Short-Term Costs: Initial transition to GST increased costs for businesses due to software upgrades, staff training, etc.
4. Inflationary Impact: GST led to a temporary rise in prices of goods and services due to the adjustment period.
5. Dual Control Issues: Both central and state governments have the power to collect GST, which sometimes leads to administrative challenges.
6. Frequent Rate Changes: Constant adjustments in GST rates create uncertainty for businesses.

Constitutional Provisions Related to GST

1. Amendment:
   • 101st Constitutional Amendment Act, 2016: Introduced GST by making changes to multiple articles of the Constitution.
2. Key Articles:
   • Article 246A: Grants concurrent powers to both Parliament and State Legislatures to legislate on GST.
   • Article 269A: Provides for the levy and collection of IGST for interstate trade, distributed between the center and states.
   • Article 279A: Establishes the GST Council, comprising central and state finance ministers, to make decisions on GST rates and structure.
   • Article 366(12A): Defines GST as a tax on the supply of goods or services or both, excluding alcohol and petroleum.
3. Exclusions from GST:
   • Petroleum products (temporarily excluded under Article 279A).
   • Alcohol for human consumption.

Landmark Cases Related to GST

1. **Mohit Minerals Pvt. Ltd. vs. Union of India (2022)
   • Issue: Whether GST on ocean freight for imported goods violates the law.
   • Ruling: The Supreme Court ruled that GST cannot be levied on ocean freight for imported goods when tax is already paid under customs law.
2. Calcutta Club Ltd. vs. Commissioner of Service Tax (2019)
   • Issue: Whether supply of services by a club to its members is taxable.
   • Ruling: The Supreme Court held that principles of mutuality apply, and transactions between clubs and their members are not subject to GST.
3. Skill Lotto Solutions Pvt. Ltd. vs. Union of India (2021)
   • Issue: Validity of imposing GST on lottery tickets.
   • Ruling: The Supreme Court upheld the imposition of GST on lottery tickets, stating that lotteries qualify as goods under GST.
4. Dilip Kumar & Co. vs. Union of India (2018)
   • Issue: Interpretation of exemptions under GST.
   • Ruling: The Supreme Court clarified that in cases of ambiguity, tax exemptions must be interpreted strictly.