Page 48 - GSTL_2nd April 2020_Vol 35_Part 1

J14 GST LAW TIMES [ Vol. 35
Goods and Services Tax (CGST) levied by the Central Government and State
Goods and Services Tax (“SGST”) levied by the State Governments under their
respective enactments derive their powers from this Article 246A(1). By exercis-
ing its powers under clause (2) of Article 246A the Parliament has made the law
with regard to Goods and Services Tax on supply made in the course of inter-
State trade and commerce. However the authority to levy tax on supplies made
in the course of inter-State trade or commerce is derived from Article 269A of the
Constitution and not from Article 246A. This is so because Article 269A of the
Constitution specifically empowers the Government of India to levy and collect
GST on supply of goods or services in the course of inter-State trade or com-
merce.
Article 269A of the Constitution reads as under :
269A. Levy and collection of goods and services tax in course of inter-
State trade or commerce. -
(1) Goods and service 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 recommendation 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.
On a perusal of the above Article it can be noticed that clause (1) only empowers
the Government of India to levy tax on inter-State trade or commerce. In view of
the definition of “State” given, in Article 366(26B), for the purpose of Article 269A
the expression inter-State used in Article 269A would mean between two Indian
States and would also include Union Territories with Legislature. Thus only when
transactions involving supply of goods or services that takes place between entities
located in two different States then the Government of India is exclusively empow-
ered to levy GST on such transactions. Further Explanation to Clause (1) of Article
269A specifically deems that supply of goods or services in the course of import
into the territory of India shall be deemed to be a supply in the course of inter-State
trade or commerce. The purpose of introducing deeming fiction for imports by
way of an Explanation, it appears, is to expand the scope of power to levy tax giv-
en under Clause (1) of Article 269A since otherwise the trade or commerce with
foreign countries cannot be said to fall within the expression “inter-State trade or
commerce” used in the said Article. It is a settled law of interpretation that Expla-
nation to a main provision at times is used to clear the ambiguity in the main pro-
vision or at times may be used to expand the scope of the main provision. In the
present context it appears since import of goods or services would not have other-
wise come within the ambit of taxing powers under Article 269A, the Legislature
in its wisdom must have expanded the scope of the Article by deeming import of
goods or import of services as a supply in the course of inter-State trade or com-
merce. However no such deeming fiction has been made in respect of supply in the
course of export of goods or export of services out of the territory of India. In ab-
sence of any such deeming fiction in Article 269A(1) deeming supply in the course
of exports of goods or export of services out of the territory of India as a supply in
the course of inter-State trade or commerce, can it be said that IGST Act has been
empowered to levy tax on supply of goods or services in the course of exports
deeming it as inter-State supply when such clause (1) of Art. 269A in absence of the
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