Understanding the shift of levy of tax on sale, purchase and consignment of goods or on services by Article 246, 248, 254 vis-à-vis levy of tax on supply of goods or services or both by Article 246A-Part-I

By CA Arpit Haldia, Author of Books on GST

The recent decision in Interglobe Aviation Ltd. vs. Principal Commissioner of Customs ACC (Import) New Custom House, New Delhi [2025] 172 http://taxmann.com 147 (Delhi) gave a deep insight to Constitutional Background of Levy of Tax in Pre and Post GST Regime. This post shares relevant extract of decision to highlight what has changed from pre to post GST Regime in terms of Constitutional Background.

In order to give effect to the shift from a tax imposable on the sale or purchase of goods, which was the major field of taxation under the Constitution as it stood prior to the Constitution Amendment Act, Articles 246A and 269A introduced a significant shift in terms of which supply of goods or services became the basis for the levy of tax. GST is not a tax related to the sale, purchase or consignment but to the supply of goods and services.

Pre-GST Regime and Article 246, 248 and 254

Article 246 was the source of power to legislate as conferred upon Parliament and States by way of reference to matters enumerated in Schedule commonly known as Union list, State List and Concurrent List.

Article 248 clothed Parliament with a residuary power of legislation thus enabling it to make laws with respect to matters including those of tax, which may not have been enumerated in either the Concurrent or the State Lists.

Article 254 in respect of matters falling in the Concurrent List recognized the preeminence of laws made by Parliament in case of conflict in laws framed by Parliament and State.

Post GST Regime and Article 246A

Article 246A- This article commences with a non obstante clause and is thus clearly intended to be accorded primacy over the traditional powers of legislation including the power to impose a tax which would flow from Article 246 of the Constitution. The non-obstante was also ordained to override Article 254 of the Constitution.

Article 246A, thus ordains that both Parliament as well as the Legislature of every State would have the power to make laws in respect of a goods and services tax. Article 246A(2), however, reserves exclusive power in Parliament to make laws with respect to the levy of a goods and services tax where the supply of goods, services or both were to take place in the course of interstate trade or commerce.

Therefore, distribution of the legislative power, including that of imposition of a tax which was otherwise regulated by Articles 246, 269 and the three lists which stand placed in the Seventh Schedule to the Constitution, the Constitution upon implementation of GST envisioned a contemporaneous and simultaneous vesting of authority in the Union and the State Legislatures to impose a tax in terms envisaged under Article 246A. Thus, acknowledging authority of both constituents to levy goods and services tax.