Procedure to File Application For Voluntary Strikinging Off the Name Of Companies U/S 248(2) in Form STK-2 (Fast track Exit Under Companies Act 2013)
The quickest way to close the non operational company is through a process called Fast Track Exit (FTE). Companies Act 2013 has a separate chapter on this subject i.e Chapter XVIII, containing section 248 to 252. These sections were came into effect from 26th December 2016.
However the E-form for filing application under section 248(2) i.e. E-form STK-2 was made available on 5th April 2017. This form is “Removal of Companies name form Registrar of Companies” like Fast Track Exit Scheme in previous Companies Act 1956.
This form is filed pursuant to sub section (2) of Section 248 of the Companies Act, 2013, which talk about ‘voluntary removal of name of Companies form Registrar of Companies. Let’s talk in details about procedure of Voluntary Striking Off Name Of Companies U/S 248(2)
WHO CAN FILE APPLICATION IN FORM STK-2 ?
Application for voluntary removal of names of companies from Register under sub section (2) of Section 248 can only be filed by the following companies:
a. A company who has failed to commence its business within one year of its incorporation
Or
b. A company which is not carrying on any business or operation for a period of two immediately preceding financial years and has not made any application within such period for obtaining the status of a dormant company under section 455.
COMPANIES NOT ALLOWED TO FILE APPLICATION IN FORM STK-2;
Following companies cannot file application under section 248(2)
a. if any time in the previous three months, the company has changed its name
b. if any time in the previous three months, the company has shifted its registered office from one State to another;
c. If the Company has made a disposal for value of property or rights held by it, immediately before cesser of trade or otherwise carrying on of business, for the purpose of disposal for gain in the normal course of trading or otherwise carrying on of business;
d. If it has engaged in any other activity except the one which is necessary or expedient for the purpose of making an application under that section, or deciding whether to do so or concluding the affairs of the company, or complying with any statutory requirement;
e. If the Company has made an application to the Tribunal for the sanctioning of a compromise or arrangement and the matter has not been finally concluded; or
f. If the Company is being wound up under Chapter XX of this Act or under the Insolvency and Bankruptcy Code, 2016.”.
PROCEDURE TO FILE APPLICATION UNDER SECTION 248(2)
1. Extinguishing all its liabilities, by a special resolution or consent of seventy-five per cent members in terms of paid-up share capital,
- File an application in E-form STK-2 along with followings attachments:
- No Objection Certificate from appropriate Regulatory Authority concerned in respect of following companies, namely :-
- NBFC
- Housing Finance Companies,
- Insurance Companies, Companies
- companies in the business of capital market intermediaries as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;
- companies engaged in collective investment schemes as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;
- asset management companies as referred to in the Securities and Exchange Board of India Act, 1992 (15 of 1992) or rules and regulations thereunder;
- any other company which is regulated under any other law for the time being in force.
- Indemnity bond duly notarised by every director in Form STK-3
- a statement of accounts containing assets and liabilities of the company made up to a day, not more than thirty days before the date of application and certified by a Chartered Accountant;
- An affidavit in Form STK 4 by every director of the company;
- A copy of the special resolution duly certified by each of the directors of the company or consent of seventy five per cent of the members of the company in terms of paid up share capital as on the date of application;
- A statement regarding pending litigations, if any, involving the company.
An application filed, will be cross-verified by ROC, by giving a public notice in English and vernacular language newspaper seeking objections from any person concerned. The ROC shall also seek objections if any, from income tax, central excise, service tax authorities. These regulatory authorities and persons has to raise objections within a period of thirty days from the date of issue of the letter of intimation / Public notice and if no objections are received within thirty days ROC shall presumed that they have no objections to the proposed action of striking off or removal of name.
NOTICE OF STRIKING OFF AND DISSOLUTION
The Registrar will issue a notice of striking off the name of the company from the register of companies and its dissolution. This notice will also be be published in the Official Gazette in and the same shall also be placed on the official website of the Ministry of Corporate Affairs.
EFFECT OF COMPANY NOTIFIED AS DISSOLVED
Though the company has been dissolved and its name removed from the Registrar of Companies. However any liabilities, if any, continues on every director, key officer, members of the company and may be enforced as if the company had not been dissolved.
Thanking you
For Kashif Ali & Associates
(Company Secretary)
Kashif Ali
FCS, M.Com., LL.B.
Call us : +91 9718483209
Mail us : cs.alikashif@gmail.com
MCA announced E-Form STK-2
Ministry of Corporate Affairs has on 5th April 2016 announced much waited E-form STK-2. This form is “Removal of Companies name form ROC” like Fast Track Exit Scheme in previous Companies Act 1956. This form is filed pursuant to sub section (2) of Section 248 of the Companies Act, 2013, which talk about ‘voluntary removal of name of Companies form Registrar of Companies. Section 248, 249, 250, 251 and 252 of Companies Act, 2013 (Chapter XVIII) were came into effect from 26th December 2016 through Ministry of Corporate Affairs (MCA) issued a Notification.
The form STK-2 can be downloaded from MCA website.
MCA MADE IT MANDATORY TO DISCLOSE DETAILS OF TRANSACTIONS MADE BY COMPANY IN ‘SPECIFIED BANK NOTES’
Ministry of corporate affairs has vide its notification dated 30th March, 2017, has made amendments in Schedule III of the Companies Act, 2013. As per these amendments every company has to disclose the details of Specified Bank Notes (SBNs) held and transacted during demonetization period from ‘8th November 2016 to 30th December 2016’ in a specified format prescribed by Ministry.
You can download the full notification form below:
http://egazette.nic.in/WriteReadData/2017/175073.pdf
For Kashif Ali & Associates
CS Mohd Saqib
The Amended Constitution (122nd) Bill (Goods and Service Tax (GST) Bill)
The Constitution (122nd Amendment) Bill, 2014’ was passed on 3rd August 2016 by ‘Rajya Sabha’ and subsequently was further unanimously passed by the ‘Lok Sabha’ by approving all the amendments. The bill has got ratification from required 16 states and our President Sh. Pranabh Mukherjee has given his assent to the Goods and Services Tax (GST) Bill, on 8th September 2016.
On 12th September 2016, the Cabinet has cleared the process, formation and functioning of the GST Council, which will decide on the rate of tax under the new indirect taxation regime. As per the news ‘Central Board of Excise and Customs’ (CBEC) to be renamed as ‘Central Board of Indirect Tax (CBIT).
Following is the comparable table showing amendment in Constitution;
THE CONSTITUTION
(ONE HUNDRED AND TWENTY-SECOND AMENDMENT)
BILL, 2014
| Article/Entry | Heading | Amendment | Amended Article |
| PART XI
(Distribution of legislative powers between the union and the States) |
|||
| “246A | Special provision with respect to goods and services tax. | Insertion of new article 246A | 1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such
State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.
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
|
| 248. | Residuary powers of
legislation |
In article 248 of the Constitution, in clause (1), for the word “Parliament”, the words, figures and letter “Subject to article 246A, Parliament” shall be substituted | Parliament Subject to article 246A, Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List. |
| 249 | Power of Parliament to legislate with respect to a matter in the State List in the national interest. | In article 249 of the Constitution, in clause (1), after the words “with respect to”, the words,
figures and letter” goods and services tax provided under article 246A or” shall be inserted |
1) Notwithstanding anything in the foregoing provisions of this Chapter, if the Council of States has declared by resolution supported by not less than two-thirds of the
members present and voting that it is necessary or expedient in the national interest that Parliament should make laws with respect to any matter enumerated in the State List specified in the resolution, it shall be lawful for Parliament to make laws for the whole or any part of the territory of India with respect to goods and services tax provided under article 246A or that matter while the resolution remains in force |
| 250 | Power of Parliament to legislate with respect to any matter in the State List if a Proclamation of Emergency is in operation | In article 250 of the Constitution, in clause (1), after the words “with respect to”, the words, figures and letter “goods and services tax provided under article 246A or” shall be inserted. | 1) Notwithstanding anything in this Chapter, Parliament shall, while a Proclamation of Emergency is in operation, have power to make laws for the whole or any part of the territory of India with respect to goods and services tax provided under article 246A or any of the matters enumerated in the State List |
| PART XII
(Distribution of revenues between the Union and the States) |
|||
| 268 | Duties levied by the Union but collected and appropriated by
the States |
In article 268 of the Constitution, in clause (1), the words “and such duties of excise on medicinal and toilet preparations” shall be omitted. | 1) Such stamp duties and such duties of excise on medicinal and toilet preparations as are mentioned in the Union List shall be levied by the Government of India but shall be collected—
(a) in the case where such duties are leviable within any Union territory, by the Government of India, and (b) in other cases, by the States within which such duties are respectively leviable |
| 268A | Service tax levied by Union and collected and appropriated by the Union and the States | Article 268A of the Constitution, as inserted by section 2 of the Constitution
(Eighty-eighth Amendment) Act, 2003 shall be omitted |
(1) Taxes on services shall be levied by the Government of India and such tax shall be collected and appropriated by the Government of India and the States, in the manner
provided in clause (2).
(2) The proceeds in any financial year of any such tax levied in accordance with the provisions of clause (1) shall be— (a) collected by the Government of India and the States;
appropriated by the Government of India and the States, in accordance with such principles of collection and appropriation as may be formulated by Parliament by law |
| 269 | Taxes levied and collected by the Union but assigned to the States | In article 269 of the Constitution, in clause (1), after the words “consignment of
goods”, the words, figures and letter “except as provided in article 269A” shall be inserted. |
(1) Taxes on the sale or purchase of goods and taxes on the consignment of goods except as provided in article 269A shall be levied and collected by the Government of India but shall be assigned and shall be deemed to have been assigned to the States on or after the 1st day of April, 1996 in the manner provided in clause (2). |
| 269A | Levy and collection of
goods and services tax in course of inter- State trade or commerce. |
‘‘269A. (1) Goods and services 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 recommendations 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.
(2) 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.’’ |
|
| 270 | Taxes levied and distributed between the
Union and the States. |
(i) in clause (1), for the words, figures and letter “articles 268, 268A and article 269”, the words, figures and letter “articles 268, 269 and article 269A” shall be substituted;
(ii) after clause (1), the following clause shall be inserted, namely:—
‘‘(1A) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2).’’. |
(1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in articles 268, 268A and 269 articles 268, 269 and article 269A, respectively, surcharge on taxes and duties referred to in article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2).
‘‘(1A) The goods and services tax levied and collected by the Government of India, except the tax apportioned with the States under clause (1) of article 269A, shall also be distributed between the Union and the States in the manner provided in clause (2). |
| 271 | Surcharge on certain duties and taxes for purposes of the Union. | In article 271 of the Constitution, after the words ‘‘in those articles’’, the words figures and letter ‘‘except the goods and services tax under article 246A,’’ shall be inserted | Notwithstanding anything in articles 269 and 270, Parliament may at any time increase any of the duties or taxes referred to in those articles except the goods and services tax under article 246A, by a surcharge for purposes of the Union and the whole proceeds of any such surcharge shall form part of the
Consolidated Fund of India. |
| 279A | Goods and
Services Tax Council |
|
279A. (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and Twenty-second Amendment) Act, 2014, by order, constitute a Council to 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, principles of levy, apportionment of Integrated Goods and Services Tax 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 rates with bands of goods and services tax; (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) (h) any other matter relating to the goods and services tax, as the Council may decide.
(5) The Goods and 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 (a) 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 weightage of one third of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast,in that meeting.
(10) No act or 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 the merits of the case. (11) The Goods and Services Tax Council may decide about the modalities to resolve disputes arising out of its recommendation
|
| 286 | Restrictions as to imposition of tax on the
sale or purchase of goods |
In article 286 of the Constitution,—
(i) in clause (1),—
(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;
(ii) 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;
(iii) clause (3) shall be omitted |
(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place— the supply of goods or of services or both,where such supply takes place;-
(a) outside the State; or
(b) (b) in the course of the import of the goods goods or services or both into, or export of the goods goods or services or both out of,the territory of India.
(2) Parliament may by law formulate principles for determining when a sale or purchase of goods takes place supply of goods or of services or both in any of the ways mentioned in clause (1).
(3) Any law of a State shall, in so far as it imposes, or authorises the imposition of,—
a) a tax on the sale or purchase of goods declared by Parliament by law to be of special importance in inter-State trade or commerce; or (b) a tax on the sale or purchase of goods, being a tax of the nature referred to in sub-clause (b), sub-clause (c) or sub-clause (d) of clause (29A) of article 366, be subject to such restrictions and conditions in regard to the system of levy, rates and other incidents of the tax as Parliament may by law specify |
| PART XIX (Miscellaneous) | |||
| 366 | DEFINITION (UNION) | (i) 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 clauses shall be inserted, namely:— ‘(26A) “Services” means anything other than goods; (26B) “State” with reference to articles 246A, 268, 269, 269A and article279A includes a Union territory with Legislature |
366. Definitions.-
In this Constitution, unless the context otherwise requires, the following expressions have the meanings hereby respectively assigned to them, that is to say- (12)…….. ‘(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 (26)…….. ‘(26A) “Services” means anything other than goods;
(26B) “State” with reference to articles 246A, 268, 269, 269A and article279A includes a Union territory with Legislature
|
| PART XX (Amendment of the Constitution) | |||
| 368` | Power of Parliament to
amend the Constitution and procedure therefore |
In article 368 of the Constitution, 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 article 279A” shall be substituted.
|
(2) An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less
than two-thirds of the members of that House present and voting, it shall be presented to the President who shall give his assent to the Bill and thereupon the Constitution shall stand amended in accordance with the terms of the Bill:
Provided that if such amendment seeks to make any change in—
(a) article 54, article 55, article 73, article 162 or article 241, article 162, article 241 or article 279A or (b) ………………. (c) ………………. (d) ………………. (e) ………………. the amendment shall also require to be ratified by the Legislatures of not less than onehalf of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent |
| SIXTH SCHEDULE
[Articles 244(2) and 275(1)] (Provisions as to the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura and Mizoram) |
|||
| Sixth Schedule paragraph 8, in sub-paragraph (3),— | Powers to assess and
collect land revenue and to Impose taxes |
(i) (i) in clause (c), the word “and” occurring at the end shall be omitted;
(ii) in clause (d), the word “and” shall be inserted at the end;
(iii) (iii) after clause (d), the following clause shall be inserted, namely:—
“(e) taxes on entertainment and amusements |
8. (1)* * * * *
(3) The District Council for an autonomous district shall have the power to levy and collect all or any of the following taxes within such district, that is to say— * * * * * (c) taxes on the entry of goods into a market for sale therein, and tolls on passengers and goods carried in ferries; and (d) taxes for the maintenance of schools, dispensaries or roads; and
“(e) taxes on entertainment and amusements |
| SEVENTH SCHEDULE
(Article 246) (List I- Union List) |
|||
| Entry 84 shall be substituted | 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.”;
|
84. Duties of excise on tobacco and other goods manufactured or produced in India
except— a. alcoholic liquors for human consumption; b. opium, Indian hemp and other narcotic drugs and narcotics, c. but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry “84. Duties of excise on the following goods manufactured or produced in India, namely:—
g. petroleum crude; h. high speed diesel; i. motor spirit (commonly known as petrol); j. natural gas; k. aviation turbine fuel; and l. tobacco and tobacco products.”;
|
|
| entries 92 | shall be omitted; | Taxes on the sale or purchase of newspapers and on advertisements published
therein. |
|
| and 92C | shall be omitted; | Taxes on services | |
|
SEVENTH SCHEDULE (Article 246) (List II — State List) |
|||
| Entry 52 | shall be omitted; | 52. Taxes on the entry of goods into a local area for consumption, use or sale therein | |
| entry 54 | following entry shall be substituted
“54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods; |
54. Taxes on the sale or purchase of goods other than newspapers, subject to theprovisions of entry 92A of List I
54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods; |
|
| Entry 55 | shall be omitted; | 55. Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television | |
| entry 62 | following entry shall be substituted, namely:—
“62. Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council.” |
62. Taxes on luxuries, including taxes on entertainments, amusements, betting and
gambling.
62.Taxes on entertainments and amusements to the extent levied and collected by a Panchayat or a Municipality or a Regional Council or a District Council |
|
- Arrangement for assignment of additional tax on supply of goods to States for two years or such other period recommended by the Council
- An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2).
- The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates.
- The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1).
- Parliament may, by law, formulate the principles for determining the place of origin from where supply of goods take place in the course of inter-State trade or commerce.
- Compensation to States for loss of revenue on account of introduction of goods and services tax.
Parliament may, by law, on the recommendation of the Goods and Services Tax Council, provide for compensation to the States for loss of revenue arising on account of implementation of the goods and services tax for such period which may extend to five years.
- Transitional provisions
Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be inforce until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.
- Power of President to remove difficulties.
If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), 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.
(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament.
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WHY AMENDMENT IN CONSTITUTION WAS MADE TO CLEAR THE WAY TO ENACT GOODS AND SERVICE TAX (GST)
WHY AMENDMENT IN CONSTITUTION WAS MADE TO CLEAR THE WAY TO ENACT GOODS AND SERVICE TAX (GST)
WHY AMENDMENT IN CONSTITUTION WAS MADE TO CLEAR THE WAY TO ENACT GOODS AND SERVICE TAX (GST)
Someone asked me that how amendment in the constitution will pave the way for the roll out of Goods and Services Tax (GST) in India. Why our parliament cannot passed the GST Bill right away like Companies Act 2013?. I tried best to explain this in this article.
A constitution is supreme law by which a country is governed. It is the base and source of powers to legislate all laws. All the authority to legislate comes from constitution. According to the Constitution of India, the government has the right to levy taxes on individuals and organizations. However, the constitution states that no one has the right to levy or charge taxes except the authority of law. Whatever tax is being charged has to be backed by the law passed by the legislature or the parliament. Any tax levied by the government which is not backed by law or is beyond the powers of the legislating authority may be struck down as unconstitutional.
The Constitution of India is federal in nature but unitary in spirit. The Federal system means division of power between Centre and States. Our constitution being federal divides all powers (Legislative Powers, Financial and Executive) between Centre and States except judicial powers. Article 246 (SEVENTH SCHEDULE) of the Indian Constitution, distributes legislative powers including taxation, between the Parliament and the State Legislature under three lists. i.e (1) UNION LIST: Areas on which only the parliament is competent to makes laws (2). STATE LIST: areas on which only the state legislature can make laws, and (3) CONCURRENT LIST: Listing the areas on which both the Parliament and the State Legislature can make laws upon concurrently.
As per these lists the Centre is empowered to tax on import export of products i.e custom and Excise duties whereas State Cannot. Whereas State can charge and collect tax on entry of goods into a local area and tax on sale or purchase of goods i.e. VAT. The States do not have the powers to levy a tax on supply of services while the Centre does not have power to levy tax on the sale of goods. There are 13 heads under Union List on which only Central can legislate tax laws and State list contain 19 heads on which which State Legislative enacts the taxation law.
Therefore, it was necessary to have Constitutional Amendments for empowering the Centre to levy tax on sale of goods and States for levy of service tax and tax on imports and other consequential issues to amend the provisions which are inconsistent with Goods and Service Tax (GST )Law.
Therefore The Constitution (122nd Amendment) Bill, 2014’ placed and passed on 3rd August 2016 by ‘Rajya Sabha’ and subsequently was further unanimously passed by the ‘Lok Sabha’ by approving all the amendments.
The bill has got ratification from required 16 states and our President Sh. Pranabh Mukherjee has given his assent to the Goods and Services Tax (GST) Bill, on 8th September 2016.
On 12th September 2016, the Cabinet has cleared the process, formation and functioning of the ,GST Council which will decide on the rate of tax under the new indirect taxation regime. As per the news ‘Central Board of Excise and Customs’ (CBEC) to be renamed as ‘Central Board of Indirect Tax (CBIT).
