Understanding GST requires us to revisit a foundational constitutional principle:
Every tax must clearly identify
(1) the Object of Taxation and
(2) the Event of Taxation
This distinction was emphasized by the Constitution Bench in the Godfrey Phillips (Luxury Tax) case, and it remains crucial in understanding GST.
1️⃣ Object vs Event of Taxation Under GST
Step 1: Identify the Object of Taxation
As per Article 366(12A):
“Goods and Services Tax means any tax on supply of goods or services or both.”
✅ Object of Taxation under GST:
- Goods
- Services
- Both
Step 2: Identify the Event of Taxation
The key question:
On the happening of what event does GST get triggered?
Answer:
Supply
Graphical Representation
OBJECT OF TAXATION
↓
Goods | Services | Both
↓
EVENT OF TAXATION
↓
Supply
↓
GST Liability Triggered
🔎 Important Constitutional Position
- The taxable event is constitutionally fixed as Supply.
- Neither Parliament nor a State Legislature can change this event.
- If any legislature attempts to levy GST on something other than “supply,” it would be ultra vires the Constitution.
This is not statutory — this is constitutional.
2️⃣ Constitutional Exclusion: Alcohol for Human Consumption
There is a clear exclusion built into the Constitution.
❌ GST does NOT apply to:
- Supply of alcoholic liquor for human consumption
This exclusion is permanent.
GST Applies To → Supply of Goods/Services
Except → Alcoholic Liquor for Human Consumption
States continue to levy:
- Excise duty
- VAT (where applicable)
on alcoholic liquor.
3️⃣ Article 246A – The Game Changer
Earlier, Article 246 distributed powers between Union and States.
GST required a special constitutional mechanism.
Thus, Article 246A was inserted by the 101st Constitutional Amendment.
🔹 Article 246A(1) – Concurrent Power
Notwithstanding Articles 246 and 254…
Both:
- Parliament
- State Legislatures
have the power to make laws with respect to GST.
What does this cover?
- CGST (Central GST)
- SGST (State GST)
This is a unique constitutional arrangement — both taxing the same transaction simultaneously.
🔹 Article 246A(2) – Exclusive Power of Parliament
Where supply takes place in the course of:
Interstate trade or commerce
👉 Parliament has exclusive power.
This is the constitutional basis for:
- IGST
Visual Summary
INTRA-STATE SUPPLY
↓
CGST + SGST
(Article 246A(1))
INTER-STATE SUPPLY
↓
IGST
(Article 246A(2))
Exclusive power of Parliament
4️⃣ Petroleum Products – A Deferred Inclusion
Article 279A(5) empowers the GST Council to recommend the date on which GST will apply to certain petroleum products.
Currently Outside GST (Until Council Recommends):
- Petroleum Crude
- High Speed Diesel (HSD)
- Motor Spirit (Petrol)
- Natural Gas
- Aviation Turbine Fuel (ATF)
Important Distinction
| Item | GST Status |
|---|---|
| Alcohol for human consumption | Permanently outside GST |
| 5 Petroleum products | Temporarily outside GST |
| Other petroleum products (e.g., Naphtha) | GST applicable |
5️⃣ What Happened to the Old Constitutional Entries?
Let us now see how Schedule VII entries were modified post-GST.
| ENTRY | PROVISION PRIOR TO AMENDMENT | AMENDMENT |
|---|---|---|
| Entry 83 | Duties of Customs including export duties. | No change |
| Entry 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, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry | 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.; |
| Entry 92 | Taxes on sale or purchase of newspaper and advertisements published therein | Omitted |
| Entry 92 C | Taxes on services | Omitted |
| Entry 92 A | Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter-State trade or commerce. | No change. |
| Entry 92 B | Taxes on the consignments of goods (whether the consignment is to the person making it or to any other person), where such consignment takes place in the course of inter-State trade or commerce. | No Change |
| Entry 51 | Duty on manufacture of alcohol for human consumption | No change |
| Entry 52 | Taxes on the entry of goods into a local area for consumption, use or sale therein. (Octroi/Entry Tax) | Omitted |
| Entry 55 | Taxes on advertisements other than advertisements published in the newspapers [and advertisements broadcast by radio or television]. | Omitted |
| Entry 54 | Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of Entry 92A of List I. | 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 62 | Taxes on luxuries, including taxes on entertainment, amusements, betting, and gambling. | 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. |
| Entry 53 | 53. Taxes on the consumption or sale of electricity. | No Change |
🟢 Entry 84 – Excise Duty (Major Amendment)
Before GST:
Excise duty applied on almost all manufactured goods (except limited exclusions).
After GST:
Excise applies only to:
- Petroleum Crude
- Diesel
- Petrol
- Natural Gas
- ATF
- Tobacco and Tobacco Products
⚠ Tobacco – Dual Levy
Tobacco products attract:
- Excise Duty
- GST
Is this constitutionally valid?
Yes.
Because:
- Excise = Tax on manufacture
- GST = Tax on supply
Different taxable events → No constitutional conflict.
🟡 Entry 92A – Central Sales Tax (CST)
Entry 92A (Interstate sale of goods) continues.
The Constitution still permits Parliament to levy CST.
However:
CST Act was amended.
Today CST Applies Only On:
- 5 Petroleum products
- Alcoholic liquor for human consumption
Total: 6 items
This restriction comes from the CST Act amendment — not from the Constitution.
6️⃣ Structural Shift Under GST
Let us compare the pre-GST and post-GST framework.
Before GST
| Tax Type | Taxable Event | Levied By |
|---|---|---|
| Excise | Manufacture | Centre |
| VAT | Sale | States |
| Service Tax | Provision of Service | Centre |
| CST | Interstate Sale | Centre |
After GST
| Tax Type | Taxable Event | Levied By |
|---|---|---|
| CGST | Supply | Centre |
| SGST | Supply | States |
| IGST | Interstate Supply | Centre |
Conceptual Transformation
Earlier:
Manufacture | Sale | Service
(All different events)
Now:
Single Event → SUPPLY
GST unified the taxable event.
7️⃣ Key Constitutional Takeaways
✔ GST is constitutionally anchored in Article 366(12A)
✔ Taxable event is fixed as “Supply”
✔ Alcohol is permanently excluded
✔ Petroleum products are temporarily excluded
✔ Article 246A creates concurrent taxing power
✔ IGST flows from Article 246A(2)
✔ Tobacco attracts dual levy (Excise + GST)
Conclusion
GST is not merely a tax reform.
It represents:
- A shift from fragmented taxable events to a unified event (Supply)
- A new model of concurrent taxation
- A delicate balance between federal autonomy and national uniformity
- A constitutionally engineered fiscal transformation
Understanding GST requires understanding:
- Object vs Event of taxation
- Article 246A
- Article 366(12A)
- Article 279A
- Modified Schedule VII entries
Only then does the structure of GST make complete constitutional sense.
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