By V. Raghuraman | Senior Advocate
Rajath Bharadwaj | Advocate
1. The Goods and Services Tax Act, 2017 (GST), launched with great fanfare on 1st July, 2017 by the Government of India, was undoubtedly the biggest reform in indirect taxes in the country since Independence. The GST regime taxes both goods and services under a common legislation while subsuming all other indirect tax laws. India is the only country in the world which has dual GST, i.e. Central GST (CGST) and State GST (SGST).
2. Before introduction of GST, there were multiple taxes, i.e, Excise Duty, VAT, Entry tax, Entertainment tax, Service tax, Octroi, etc. Additionally, there were various cesses imposed by State and Central Government like Krishi Kalyan Cess, Clean energy cess, etc. These factors made the tax structure very cumbersome. In many instances, there was an imposition of tax on tax which led to a cascading effect and affected the final price. For eg. sales tax was charged even on the amount of excise duty that was levied on manufacture. To that extent the purpose of introduction of GST has been met as GST has subsumed all the other indirect taxes and consolidated them in one levy. This has resulted in lowering of indirect tax burden which is beneficial for consumers.
3. To compensate the state’s loss, Goods and Services Tax (Compensation to States) Act, 2017 was implemented, the constitutional validity of which was upheld in
Union of India vs. Mohit Mineral Pvt Ltd [
