Constitution (application to Jammu & Kashmir) Amendment order 2017

6 July 2017

Press information Bureau of India (PIB) stated: "

The State of Jammu and Kashmir joins GST today making the GST truly a “ one nation, one tax” regime.

The President of India has promulgated today two ordinances, namely, the Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 extending the domain of Central GST Act and the Integrated GST Act to the State of Jammu and Kashmir, with effect from 8th July, 2017. With this, the State of Jammu and Kashmir has become part of the GST regime, making GST truly a “ one nation, one tax” regime.

Earlier, the Goods and Services Tax was launched in the country from the midnight of 1st July, 2017. However, because of the special provisions applicable to the State of Jammu and Kashmir extra steps had to be taken before the State could join the GST fold.

On 6th July 2017, the State of Jammu and Kashmir had taken the first step towards adopting the GST regime with the President of India giving assent to the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017. Resultantly, the One Hundred and First Amendment Act, 2016 to the Constitution of India that paved the way for introduction of GST in the country, became applicable to the State of Jammu and Kashmir also. Following this, on 7th July, 2017, the Jammu and Kashmir Goods and Services Tax Bill, 2017 was passed by the State Legislature, empowering the State to levy State GST on intra-state supplies with effect from 8th July, 2017.

Concomitantly, the President of India has promulgated two ordinances, namely, the Central Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 and the Integrated Goods and Services Tax (Extension to Jammu and Kashmir) Ordinance, 2017 extending the domain of Central GST Act and the Integrated GST Act to the State of Jammu and Kashmir, with effect from 8th July, 2017. "

Text of Order:

In exercise of the powers conferred by clause (1) of article 370 of the Constitution, the President, with the concurrence of the Government of the State of Jammu and Kashmir, is pleased to make the following Order:

(1) This Order may be called the Constitution (Application to Jammu and Kashmir) Amendment Order, 2017.

(2) It shall come into force at once.

(3) Notwithstanding anything contained in this Order, the powers of the State of Jammu and Kashmir as per section 5 of the Constitution of Jammu and Kashmir shall remain intact.

In Paragraph 2 of the Constitution (Application to Jammu and Kashmir) Order, 1954.

(I) In sub-paragraph (6), relating to Part XI,

(l) After clause (a), the following clause shall be inserted, namely:

(aa) after article 246, the following article shall be inserted, namely:

“246A. (l) The Legislature of the State of Jammu and Kashmir shall have powers to make laws with respect to goods and services tax levied by the State.

(1 A) Notwithstanding anything contained article 246 and 254, the Parliament shall have power to make laws with respect to goods and services tax levied by the Union.

(2). Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods or of service or both takes place in the course of inter-state trade or commerce.

(3) The Legislature of State of Jammu and Kashmir shall have exclusive powers to make laws in respect of imposition of any taxes as enabled by section 5 of the Constitution of Jammu and Kashmir.

Explanation: The provisions of this article shall, in respect of goods and services tax referred to in clause (5)of article 279A, take effect from the date recommended by the Goods and Services Tax Council,.

(2) In clause (c), before the words “to any of the matters”, the words, figures and letter, “goads, and service tax provided under article 246A or” shall be inserted;

(II) In sub-paragraph (7), relating to Part XII, –

(l) After clause (c), the following clauses shall be inserted, namely;

(d) In article 268., in clause (l), the words “and such duties of excise on medicinal and toilet, preparations” shall-be omitted;

(e) In article 269 in clause (l), in the sub-clause (g) after the words inter-state trade or commerce, the words, figures and letter “except as provided in article 269 A” shall be inserted.

(f) After article 269 the following article shall be inserted, namely:-

“269A. Levy and collection of goods and service tax in course of inter-State trade or commerce. (l) Goods and services tax on supplies in the course of inter-Slate trade or commerce shall be levied and connected by the Government of India and such tax shall Be apportioned between fee Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services ‘fax 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.

(2) The amount apportioned to a Stats under clause (l) shall not form part of the Consolidated Fund of India.

(3) Where an amount collected as lax levied under clause (l) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India.

(4) The amount transferred by the Union to the State consequent to goods and services tax on supplies in the course of inter-State trade or commerce shall be net of the following amounts, namely:

(a) The amount apportioned under clause (l)to the State;

(b) The amount collected as tax levied under clause (/) used for the payment of the tax levied by the State under article 246A;

(C) The amount collected as tax levied by the Slate under, article 246A used for the payment of tax levied under clause (l).

(d) The amount distributed to the State under clause (2) Of article 270.

(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.

(g) in article 270, after clause (/), the following clauses shall be inserted, namely:—

“(1A) The tax collected by the Union under clause (I A) of article 246A shall also be distributed between the Union and the States in the manner provided in clause (2).

(IB) The tax levied and collected by the Union under clause (2) of article 246A and article 269A, which has been used for payment of the tax levied by the Union under clause-(/.) of article 246A, and the amount apportioned to the Union under clause (l) of article 269A, shall also :be distributed between the Union and the States in the manner provided in clause (2).”

(h) In article 271, after the: words, “in those articles”, the words, figures and letter “except the goods and services tax under article 246 A” shall be inserted:

(f) after article 279, the following article shall be inserted, namely:—

“279A. Goods and Service Tax Council.— (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred land First Amendment) Act, 2016, by Order, constitute a Council so be called the Goods and Services Tax Council.

(2) The Goods and Services Tax Council shall consist of the following Members, namely:—

(a) the Union Finance Minister ….Chairperson;

(b) the Union Minister of State in charge of Revenue or Finance …. Member;

(c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government ….. Members.

(3) The Members of the Goods and Services Tax Council referred to in sub- clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.

(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—

(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;

(b) the goods and services that may be subjected to, or – exempted from, the goods and services tax;

(c ) model Goods and services Tax Laws, Principal of levy, apportionment of Goods and services Tax levied on supplies in the course of inter-state trade or commerce under article 269A and the principles that govern the place of supply.

(d) The threshold limit of turnover below which goods and services may be exempted from goods and services tax;

(e) the rates including floor or rates for a specified period, to raise additional resources during any natural calamity or disaster.

(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;

(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur; Meghalaya; Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and

(h) any other matter relating to the goods and services; tax, as the Council may decide,

(5) The Goods arid Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and Aviation turbine fuel.

(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.

(7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.

(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:

(a) the vote of the Central Government shall have a weight age of one third of the total votes cast; and

(b) the votes of all the State Governments taken together shad have a weight age of two-thirds of the total votes cast, in that meeting.

(10) No act at proceedings of the Goods and Services Tax Council shall be invalid merely by reason-of —

(a) any vacancy in, or any defect in, the constitution of the Council; or

(b) any defect in the appointment of a person as a Member of the Council; or

(c) any procedural irregularity of the Council not affecting die merits of the case.

(11) The Goods and services Tax Council shall establish a mechanism to adjudicate any dispute –

(a) between the Government of India and one or more states; or

(b) between the government of India and any state or states on one side and one or more other States on the other side; or

(c) between two or more States,

arising out of the recommendations of the Council or implementation thereof.

(12) Notwithstanding anything contained in clause (4) to clause (11), for the purpose of any decision impinging on the constitutional provisions relating to the state of Jammu and Kashmir, the concurrence of the representative of the state of Jammu and Kashmir in the Goods and service Tax Council shall be mandatory and the procedure provided under article 370 shall be followed.

(13) nothing in this article shall affect in any manner whatsoever the legislative competence of State of Jammu and Kashmir as guaranteed by virtue of section 5 of the Constitution of Jammu and Kashmir.

(j) in article 286, –

(l) in clause (l), –

(A) for the words “the sale or purchase of goods where such sale or purchase takes place” the words “the supply of goods or of services or both, where such supply takes place” shall be substituted;

(B) in sub-clause (b) for the word “goods” at both the places where it occurs, the words “goods or services or both” shall be substituted;

(2) in clause (2) for the words sale or purchase of goods takes place, the words “supply of goods or of services or both” shall be substituted:

(3) clause (3) shall be omitted:

(III) in sub-paragraph (14) relating to part XIX,-

(1) after clause (a) the following clauses shall be inserted, namely:-

(aa) in article 366,-

(l) after clause (12), the following clause shall be inserted namely:-

(12A) “goods and services tax” means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption;

(ii) after clause (26) the following clause shall be inserted, namely:-

(26A) “services” means anything other than goods;

(26B) “State” with reference to articles 246A, 268, 269, 269A and article 279A includes a Union territory with legislature;

(IV) in sub- paragraph (15) relating to part XX, for clause (a), the following clauses shall be substituted, namely-

(a) in article 368, in clause (2), in the proviso, in clause (a), for the . words and figures “article 162 or article 241”, the-words, figures and letter, “article 162, article 241 or articie 279A” shall be substituted;

(aa) to clause (2) of article 368, the following proviso shall be added, namely:—

“Provided further that no such amendment shall have effect in relation to the State of Jammu and Kashmir unless applied by order of | the President under clause (l) of article 370”.

(V) in sub-paragraph (22), relating to Seventh Schedule,—

(l) clause (a) after sub-clause (III) the fallowing clauses shall be inserted, namely:—

(iiia): for entry 84, the following entry shall be substituted, namely:—

“84. Duties of excise on the following goods manufactured or produced in India, namely:—

(a) petroleum crude;

(b) high speed diesel;

(c) motor spirit (commonly known as petrol);

(d) natural gas;

(e) aviation turbine fuel; and

(f) tobacco and tobacco products;

(iiib) entry 92 shall be omitted;

(VI) section 18 of the Constitution (One Hundred arid First Amendment) Act, 2D 16 shall, mutatis mutandis, apply to the State,

(VII) sections 19 and 20 of the Constitution (One Hundred and First Amendment) Act,2016.shall apply in the following form, namely:—-

“19. Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in the State of Jammu and Kashmir immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as applicable to the State of Jammu and Kashmir, shall continue to be in force until amended or repealed by the Legislature of the State of Jammu and Kashmir or until expiration of one year from the commencement of this Constitution Application Order, whichever is earlier

Subject to the provisions! of article 370, if any difficulty arises in giving effect the provisions of the Constitution as amended by this Constitution Application Order (including any difficulty in relation to: the transition from the provisions of the Constitution as they stood immediately before the date of issuance of this Order), the President may, by Order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:

Provided that no such Order shall be made after the expiry of three years from the date of such assent”.

Source: PIB