Introduction
The Goods and Services Tax (GST in India) represents one of the most significant indirect tax reforms in the history of independent India. It was introduced to consolidate a complex system involving multiple indirect taxes levied by the Centre and the States into a single and simplified tax system. The Constitution (One Hundred and First Amendment) Act, 2016, GST came into force on 1 July 2017 and replaced major indirect taxes such as excise duty, service tax, VAT, and central sales tax. This tax regime is built on the principle of “one nation, one tax,” ensuring a seamless flow of credit and removing the cascading effect of taxes.
GST is levied at the point of consumption rather than origin. Article 246A of the Constitution vests the power in the Parliament and the State Legislatures to legislate with respect to goods and services tax. The GST Council, constituted under Article 279A of the Constitution, plays a central role in formulating policy decisions, resolving inter-governmental disputes, and ensuring cooperative federalism in tax administration.
By bringing together a variety of taxes, GST aims to simplify compliance, improve revenue efficiency, and enhance transparency in the overall tax structure. Despite initial resistance and transitional challenges, it is now regarded as a progressive step towards a unified economic market across India. The implementation of GST has also given rise to significant constitutional, legal, and procedural questions, many of which have been addressed by landmark judicial pronouncements, thus shaping the interpretation and operational contours of the GST law.
Types of GST and Their Application
| Type of Tax | Levying Authority | Applicable When | Example |
| CGST (Central GST) | Central Government | Intra-State supply of goods/services | Sale of goods within Maharashtra attracts CGST and SGST |
| SGST (State GST) | State Government | Intra-State supply of goods/services | Same as above; SGST is collected along with CGST |
| IGST (Integrated GST) | Central Government (shared with States) | Inter-State supply of goods/services | Sale from Maharashtra to Gujarat attracts IGST |
| The Union Territory Goods and Services Tax Act, 2017 (UTGST Act) | Union Government | supplies made within Union Territories that do not have a legislature | Sale within Chandigarh attracts CGST and UTGST |
Key Statutes and Rules
The legal framework governing the Goods and Services Tax in India is primarily built upon two central legislations, the Central Goods and Services Tax Act, 2017 (CGST Act) and the Integrated Goods and Services Tax Act, 2017 (IGST Act).
The CGST Act regulates the levy and collection of tax on intra-State supplies of goods and services by the Central Government. It lays down the rules for registration, returns, input tax credit, assessment, audit, and appeals, among other procedural and substantive provisions.
The IGST Act governs inter-state trade and commerce. It authorizes the imposition of Integrated Goods and Services Tax (IGST) on inter-State supplies of goods and services, including supplies made in the course of import into or export out of India.
This version is consistent with the language used in the IGST Act, 2017 and constitutional provisions under Article 269A. Let me know if you’d like a footnote version or case reference with it.
One of its key features is the mechanism for apportioning revenue between the Centre and destination States, in accordance with principles laid down by the GST Council. Both Acts are complemented by detailed GST Rules, which cover aspects like valuation, composition scheme, returns, e-way bills, anti-profiteering, and appeals. The Central Government also issues Notifications, Circulars, and Orders under the CGST Act, which clarify legal provisions and implement procedural changes as needed.
A unique constitutional body created under Article 279A, the GST Council plays a vital role in the development and administration of GST law in India. Composed of the Union Finance Minister as Chairperson and Finance Ministers of all States as members, the Council makes recommendations on crucial matters such as tax rates, exemptions, model laws, and dispute resolution. These decisions are recommendatory, but have significant persuasive value and ensure uniformity and cooperative federalism in tax administration across the country.
At the state level, every State and Union Territory with a legislature has enacted its own State GST (SGST) or UTGST Act, mirroring the CGST Act with minor variations tailored to State-level administration.
In brief, the Primary Laws are
- Central Goods and Services Tax Act, 2017 (CGST Act) – handles intra-state supplies by Central Government
- Integrated Goods and Services Tax Act, 2017 (IGST Act) – covers inter-state trade, imports and exports
State Level Laws
- Each State has its own SGST Act (mirrors CGST Act with small changes)
- Union Territories without legislature use UTGST Act
Supporting Framework
- ST Rules – detailed guidelines on valuation, composition scheme, returns, e-way bills, anti-profiteering
- Government issues Notifications, Circulars and Orders for clarifications and updates
- GST Council (Article 279A)
Registration and compliance
GST registration is a statutory requirement for every supplier whose aggregate turnover exceeds the threshold limit as prescribed under Section 22 of the CGST Act, 2017. The threshold varies depending on the type of supply and location. Additionally, compulsory registration is required under Section 24 for specific categories such as inter-state suppliers, agents, e-commerce operators, and non-resident taxable persons, regardless of turnover.
The registration process is digital and administered through the GST Common Portal (www.gst.gov.in). An applicant must submit Form GST REG-01, along with supporting documents such as PAN, proof of business address, bank details, and identity proof. Once the verification process is completed successfully, the applicant is allotted a unique Goods and Services Tax Identification Number (GSTIN), which confirms registration under the GST law. Timely registration is essential, as failure to obtain registration when liable can result in penalties under Section 122 and may render the input tax credit unavailable to recipients.
Landmark Judgment on GST
M/s. Bharat Aluminium Company Limited v Union of India & Ors.
FACTS:
Bharat Aluminium Company Limited received a notice dated 01.07.2020 wherein the Input Tax Credit claimed by the petitioner was ₹95,464.59 lakhs. The notice was issued by the tax authorities questioning the availment of Input Tax Credit due to a mismatch between GSTR 2A and GSTR 3B returns. The company approached the Chhattisgarh High Court seeking relief against the denial of Input Tax Credit on account of such a mismatch between the returns filed by the petitioner and the details available in GSTR 2A.
ISSUES:
- Whether Input Tax Credit can be denied solely on the basis of a mismatch between GSTR 2A and GSTR 3B returns.
- Whether the petitioner is entitled to ad-interim relief pending final adjudication of the Input Tax Credit dispute.
- The validity of the denial of Input Tax Credit where there is a discrepancy between the details furnished in GSTR 3B and the details available in GSTR 2A.
- Whether the tax authorities can proceed to recover Input Tax Credit without following the proper adjudication process.
HELD:
The Chhattisgarh High Court held that:
- The Court granted ad-interim relief to the petitioner, staying the recovery proceedings.
- Input Tax Credit cannot be denied mechanically solely on account of a mismatch between GSTR 2A and GSTR 3B without proper adjudication.
- The tax authorities must follow due process before denying or recovering the Input Tax Credit claimed by the taxpayer.
- The Court emphasized that a mere discrepancy between returns does not automatically disqualify the taxpayer from claiming legitimate Input Tax Credit.
- The Court directed that no coercive action should be taken against the petitioner pending final adjudication of the matter.
Conclusion
The introduction of the Goods and Services Tax (GST) in India marked a transformative shift in the country’s indirect tax regime. By merging multiple taxes into a single, unified system, GST not only simplified compliance but also advanced the vision of one nation, one tax. The four-tier structure, CGST, SGST, IGST, and UTGST reflects India’s dual model, balancing central and state interests while maintaining a uniform tax mechanism. Moreover, the provisions for registration, return filing, and payment, coupled with a streamlined input tax credit system, promote transparency and reduce the cascading effect of taxes.
Importantly, GST is not just a tax reform but a structural reform aimed at increasing compliance, reducing litigation, and improving ease of doing business. The legal and procedural safeguards, such as the composition scheme, advance ruling mechanism, and appellate redressal hierarchy, protect taxpayer rights while ensuring government accountability. Some landmark judgments have further clarified contentious aspects of GST law and strengthened its constitutional validity.
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