Constitutional Law -Amendment of !?

 GST moves forward as Cabinet clears Constitutional Amendment Bill

krsrivats@thehindu.co.in

BL 16th Mar

"The introduction of goods and services tax (GST) system has moved a step forward, with the Union Cabinet on Tuesday giving its nod for introduction of a Constitutional Amendment Bill in Parliament."

This, for what one knows, marks a singular development of its kind- in the history of our 'constitutional law'.  

Without anyone bothering self or the others to go into the merits or otherwise of the proposed GST scheme as such, the entire focus as of now is that the proposal is by and large considered a step in the on-going exercise at 'simplification'.  

The 'step forward' having been accomplished by the 'UC' giving its 'nod', the Nation now simply awaits the final resolution; albeit with a 'mixed feeling' and 'thawing expectation' as to what is 'in store' ahead.

NOTE:

As to why it may be said to be ' a singular development of its kind--' , read stories @:


http://www.caclubindia.com/news/cabinet-clears-gst-constitution-amendment-bill-8829.asp

Govt. may bring constitution amendment bill on GST this session

For Knowing More, in General, to read:

1. The constitutional law expert, late N A palkhivala’s   Speeches and Articles in which he has eloquently and eminently expounded the intricacies of our Constitution and its related issues, in the 2 Books-

    

 WE, THE PEOPLE

 We, the Nation THE LOST DECADES

2. The Law and Practice of Income Tax (latest, Ninth Edition, Vol I @ pages 4 to 9  )

3. http://www.legallyindia.com/wiki/Constitution_of_India#Changing_the_constitution
 (Changing the Constitution; also,Judicial review of laws)


Addendum:

A. http://www.thehindubusinessline.com/todays-paper/tp-opinion/article1544729.ece

B.http://www.tax4india.com/service-tax-india/service-tax-validity.html

The Hon'ble Supreme Court while deciding the case, observed as follows: -

"The service tax levied by reason of services which are offered. The imposition is on the person rendering the service. Of course, it may be indirect tax, it may be possible that the same is passed on to the customer but as far as the levy and assessment is concerned, it is the person rendering the service who alone can be regarded as an assessee and not the customer. This is the only way in which the provision can be read harmoniously.

The Hon'ble Apex Court further opined that ''The charge of tax is on the value of services and it is only the person who is providing service can be regarded as an assessee. The rules, therefore, cannot be so framed which do not carry out the purpose of the Chapter (Statute) and cannot be in conflict with the same.''

The above  needs to be closely studied  and understood, as that might help and bring to surface some materially valid points having a nexus to the subject topic; besides, on the lurking doubt whether the service provider is at all right in passing on, as a matter of routine,but left unquestioned,the burden of service tax to the 'serviced'.

KEY NOTE: As one may be aware, - income-tax is a tax on 'income', it is levied on the person who is in receipt or 'beneficiary' of it, it is he who is the 'assessee', accountable and liable to pay, and if instead,by virtue of a contract or arrangement, the tax otherwise payable/to be borne by the assessee comes to be passed on to / 'borne' by another,the assessee is liable to pay tax by applying the commonly known concept of - 'grossing up of income for tax'.

The point is prima facie a moot one. Nonetheless, it seems  worthwhile to seriously consider: - Why not, by the same token of logic, 'service tax' (so also 'GST', if and after it has come into force) passed on by the service provider (or 'seller'),to his 'serviced'('customer'), be regarded a 'benefit' and accordingly be treated as his 'income' and taxed as such in his hands? OR

- In the alternative, for achieving the same result,is there not scope for invoking the provision already on the statute- section 40 (ii) of the IT Act- or in any case, justification for suitably amending it.

May be, preferably,- this is, in one's perception,an aspect worth considering, to the end of introducing a suitable provision in the DTC Bill.

Caution:For a proper examination of action called for on the foregoing lines,it is imperative for one,- to make a close study of the plethora of court decisions on the scope / interpretation of the extant provision I.E. section 40(ii)- for useful clues, one may look up the expert commentary and case law in - Palkhivala's BOOK on INCOME TAX, u/s 40 (ii) and (iia);


UPFRONT,NONETHELESS,OUGHT TO KEEP IN FULL FOCUS ALSO THE LARGER 'ECONOMIC CONSEQUENCES' OF ANY SUCH ACTION, if were taken.

FOR OBVIOUS REASON,IN DOING SO,THE PROPOSED GST SHOULD NOT BE LEFT OUT BUT SHOULD DULY FIGURE IN / BE FACTORED.