No legal infirmity in GST notifications, says revenue secretary Adhia

Setting at rest confusion over levy of excise duty, the Finance Ministry said on Monday there is no "legal infirmity" in the notifications issued by the government with regard to the GST Constitution Amendment Act.

Some experts have raised doubt about the legality of levying excise duty by the Centre on various commodities till implementation of the goods and services tax (GST) from April 1, 2017, after the government on September 16 notified certain provisions of the Act.

Representational image. Reuters

Representational image. Reuters

"DoR (department of revenue) examined the validity and implications of notifications dated September 10 and 16 with respect to existing taxes imposed by the Union and states. There is no legal infirmity in these notifications," Revenue Secretary Hasmukh Adhia tweeted.

He further said the law department has confirmed that "there appears to be no legal requirement to issue any further clarification or notification in this regard".

The confusion arose following the notification with regard to amendment of Entry 84 of the Union List following which the Centre can levy excise only on petroleum crude, high-speed diesel, petrol and natural gas.

Earlier, Entry 84 of the Union List of the Constitution allowed the Centre to levy excise duty on tobacco and other goods with the exception of potable alcohol, opium and narcotic drugs.

In view of these amendments, it was speculated whether the government could legally collect excise duty till the day GST, which will subsume excise duty in addition to service tax and other levies, is implemented.

The other view, however, was that the Centre has widespread power under Entry 97 of the Union List to levy taxes on goods which are not mentioned in any List under the Seventh Schedule of the Constitution.

Entry 97 says the Centre will have powers on "any other matter not enumerated in List II or List III, including any tax not mentioned in either of those lists".

List II under the Seventh Schedule of the Constitution deals in subjects on which states have legislative powers while List III is the concurrent list wherein both the Centre and states can make laws.

Nangia & Co Director Rajat Mohan said, "The government may say the power to levy excise, service tax could be drawn from Entry no. 97 from the Union List which is residuary entry. The power to levy state taxes i.E. VAT, entry tax and Octroi etc could be drawn from Section 19 of The Constitutional (One Hundred and First Amendment) Act, 2016.

Updated Date: Sep 20, 2016 09:42 AM

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