In Re HON'BLE SHRI JUSTICE C.S KARNAN - A BRIEF OVERVIEW

The complete judgment in the case of In Re Hon’ble Justice C.S Karnan was recently published by the Supreme Court, and is briefed herein below.

Coram:

·         Chief Justice JS Khehar

·         Justice Dipak Misra,

·         Justice Jasti Chelameswar

·         Justice Ranjan Gogoi

·         Justice Madan B Lokur

·         Justice Pinaki Chandra Ghose 

·         Justice Kurian Joseph

Date: 09/05/2017

Matter: Contempt of Court

Nature of initiation of Proceedings: Suo-Motu 

Facts in Brief: A series of allegations leveled against various judges of the Madras High Court – letters sent to highest executive and judicial authorities – alleging academic qualifications of a newly appointed judge to be “bogus”, decisions of two other judges as “not independent judicial function”, etc. – accusation against CJ of Madras HC for approaching the SC against suo-motu Order passed by J. Karnan himself and of caste segregation and “ragging” – series of allegations against several judges of the Madras HC, including illicit relationship with each other, etc. – Suo-Motu proceedings initiated for contempt of Court – Bench of seven senior-most Judges of the Supreme Court was constituted, to examine whether or not Shri Justice C.S. Karnan was guilty – accused was asked to appear in Court but did not – passed several suo-motu Orders to police Officers, Air Control Authority, etc. to register cases against the Judges of the SC (including the CJ), restrain them from travelling abroad, and even sentencing them to 5 years of rigorous imprisonment.

Decision of the Supreme Court: The Court ruled that Sri Justice C.S. Karnan has committed contempt of the judiciary. His actions were held to constitute contempt of this Court and of the judiciary of the gravest nature and he was convicted and sentenced to six months of imprisonment. The Court also ordered that no further statements made by him should be published hereafter, since the incident of contempt includes public statements and publication of orders made by him which were highlighted by the electronic and print media.

Relevant portions of the Judgment: (in brief)

“……Justice Karnan shielded himself from actions, by trumpeting his position, as belonging to an under-privileged caste” [and] “…leveled obnoxious allegations against innumerable Judges of the Supreme Court, Chief Justices of the High Courts, but mostly against Judges of the Madras High Court.”

“His public utterances turned the judicial system into a laughing stock”

“None of his actions can be considered as bona fide, especially in view of the express directions issued by this Court… requiring him to refrain from discharging any judicial or administrative work.”

Relevant Statutes (Indian Kanoon):

·         Contempt of Courts Act, S. 2(c), 12 and 14

·         Constitution of India, Article 20

Internet of Things - How Preemptive Consultation from a Lawyer Can Decrease Your Cost of Doing Business

INTERNET OF THINGS: THE BUSINESS PROSPECTS

As we have seen in the previous posts, the IoT business is in the boom, exploring new trends and possibilities constantly, and continuously evolving with technological advances. It gives rise to several legal questions, and the law is rapidly undergoing corresponding dynamic changes to adapt to the new demands created. When the extent of regulatory control and statutory requirement is spread over a plethora of areas such as Information Technology, privacy, commerce and business, IPR, etc., it becomes quintessential for a company to consult a lawyer before beginning with the business and its procedural requirements. In addition to that, the costs involved in any start up is immense, and would require investments from all people involved, and also formal or informal modes of borrowing. There is less prospect of being able to reduce the costs in terms of hardware/software, inventory, employee or similar requirements; but pre-emptive consultation from a lawyer can certainly help you mitigate the costs at least to some extent.

HOW PRE-EMPTIVE CONSULTATION DECREASES COST OF DOING BUSINESS

·         Choice of Business Structure: The Indian legal scheme allows you to shape a business in several structures, like a One Person Company, Public Ltd Co, Private Ltd Co, Limited Liability Company (LLC), Limited Liability Partnership (LLP), Partnership firm, etc. The limitation (or not) of liability, the legal formalities involved, extent of Regulatory compliances, etc. would depend on the structure, and thus it is a major decision to be made while planning the business. A lawyer can guide you properly, advising you on the nature of each structure, and helping you choose a suitable one. This would help to get rid of confusion and possible unnecessary expenses thereon.

·         Ensuring Pre-Commencement Compliances: Legal advice and guidance from a lawyer can help you make sure that all necessary Regulatory compliances have been met and the mandatory documents are well in place, before you commence with your IoT business. This would prevent occurrences of violations or breaches due to ignorance of law (which is not an excuse), and would in turn prevent chances of imposition of penalties.

·         Contracts (Indian kanoon): Any Business endeavour, whether IoT or not, would need to enter into contractual relationships with several parties in course of business, whether it be consumers, shareholders, or other stakeholders. Proper drafting of these contracts is essential to limit the liability of the company in case of any breach of terms, or loss incurred to the other party; only proper drafting can possibly absolve or at least limit the liability to compensate the person in such case. Since IoT business tests waters of different matters such as IPR, IT, business, consumer laws, privacy laws, etc., it is very important to have carefully drafted contracts and agreements with each of the concerned parties.

·         Equity Financing: Seeking equity financing for a business involves preparation of shareholder agreements and review of related documents, assessment of potential impact of such agreement on other contractual liabilities of the business, etc.

·         Tax Liabilities: A lawyer can assess your business to ensure that your activities do not lead to any unnecessary tax liabilities, and thus minimise taxes; at the same time overseeing that you indeed pay the amount you are liable to pay. While it is perfectly legal to minimise tax liabilities, it is to be ensured that you don’t ignorantly evade taxes in any manner.

·         Risk Appraisal: While entering into business contracts, transactions, or in making investment decisions, it is essential to properly evaluate the risks involved, and balance it with potential profits of a risky investment. A lawyer can properly evaluate a legal risk that may be inherent in a particular nature of investment or a transaction. For eg. a lawyer can reasonably predict whether a particular technology that you purport to buy for your IoT business is under risk of regulatory shackles owing to public safety concerns (like privacy or security); and help you prevent loss.

·         Negotiations: Business transactions include a plethora of negotiations and deals with several stakeholders such as suppliers, financiers, banks, etc. In case of an IoT business, you would be required to negotiate with the manufacturers and Patent holders of a number of different technologies, and work out a deal to bring all this innovation under a single umbrella. A lawyer could help you negotiate well with the other stakeholders, incorporating favourable terms and conditions; at the same time preventing terms that would be unfavourable to you.

The benefits of cost-cutting, stated above, are only a few of the advantages that would accrue to a prospective business by way of pre-emptive consultation of a lawyer. The major premise of a lawyer’s role in business environment is that ensuring various regulatory compliances would prevent future liabilities and consequential penalties. The IoT domain is new and emerging to the business world, and contains lucrative prospects of growth and profits; being ventured into by many companies in the past few years. The help of a lawyer could afford you a s afer and cheaper entry and survival (and of course flourishing, we hope!) in the IoT domain. 

PM NARENDRA MODI IN ISRAEL-THE PACTS SIGNED THIS WEEK

The most recent official international visit undertaken by our Prime Minister Mr. Narendra Modi to Israel was an unprecedented move owing to the fact that he became the first Indian PM to do so. The meeting with his Israeli counterpart saw the diplomatic relationship between the two countries take a positive turn, and seven pacts were signed between the two premiers on various matters of national and international relevance.

·         Science and Technology: A Memorandum of Understanding (MoU) was signed between our Department of Science and Technology and Israel’s National Technological Innovation Authority to set up an Industrial Research and Development (R&D) and Technical Innovation Fund for India and Israel, worth about $ 40 Million.

·         Water: Our Ministry of Drinking Water and Sanitation signed an agreement with Israel's Ministry of National Infrastructure, Energy and Water Resources for a National Campaign for Water Conservation in India. Also, the Uttar Pradesh Jal Nigam signed a pact with the latter above for State Water Utility Reform in India.

·         Agriculture: A three-year work program from 2018-20 in the nature of a Development Cooperation in Agriculture sector, to promote and develop the same in course of the stipulated time period.

·         Space: An agreement was reached between the two premiers in regard to cooperation between Indian Space Research Organization (ISRO) and the Israel Space Agency (ISA) for collaborating works on Atomic Clocks. In addition to these, ISRO and ISA also signed MoUs on GEO-LEO Optical Links and for Electric Propulsion of Small Satellites, both of which would help with the development of space science and cooperation between both parties.

The talks also touched upon the topics of better diplomatic relationships, coordinated counter-terrorism moves, etc. and the current development may prove to be a pivotal positive step for both the countries. India has extended its diplomatic ties with Israel despite the Palestinian cause advocated by India, much in line with the general international condemnation of the Palestinian situation. 

ADDHAR CARD AND MARRIAGE-THE PROPOSAL TO LINK AND ITS IMPLICATIONS

Aadhaar and Marriage Registration: The New Development

With Aadhaar or the Unique Identification Number (UID) slowly but eventually taking over the domain of as a repository for all information on a person, the latest development is the recommendation by the Law Commission to the Govt that registration of marriages be linked with Aadhaar No as well, to ensure that false particulars are not submitted in lieu of marriage, and so that universal tracking of records would be possible. If the same is implemented by the Govt, Aadhaar would also become linked to marriage records, making the privacy risk ambit of the 12-digit number wider, with added information falling in its purview apart from the already included details of Bank Account No, Mobile No, PAN Card, etc. Other documents that can be linked to Aadhaar include Pension Account, Scholarship Account, Ration Card, Voter ID Card, LPG Connection, etc. In the absence of stringent and fool proof cyber security, the privacy of every citizen is at peril, since all relevant social, financial, and biometric information regarding the person is contained in a single repository.

The Law Commission Report: An Overview

The 270^th Report (“Compulsory Registration of Marriages”) of the Law Commission headed by retired Supreme Court judge Justice B S Chauhan was submitted to the Govt of India on 4^th July 2017, in response to a query put forth by the Legislative Department on 16^th February 2017, asking the Commission to submit a Report with regard to various issues relating to the compulsory registration of marriages in India. One of the questions probed by the Department was whether it is enough to pursue amendments in the Registration of Births and Deaths Act, 1969 as per the Registration of Births and Deaths (Amendment) Bill, 2015 or it must go ahead to frame a ‘separate standalone legislation to provide for compulsory registration of marriages, in order to bring uniformity in all laws, including the Central and State Personal Laws’[i]. The Commission in turn proposes to amend the Registration of Births and Deaths Act, 1969 to include the compulsory registration of marriages within its purview[ii]. The Report clarifies that its aim is to eliminate practices like early/forced marriages, and is not aimed at eliminating diversity of personal laws; on the other hand accepts prevailing customs/ or personal laws concerning solemnization of marriage; provided that these marriages are registered under the Compulsory Registration of Births Deaths and Marriages Registration Act or any other law for the time being in force in the State[iii]. The Report upholds the validity of unregistered marriages solemnized through religious ceremonies, but recommends that an unregistered marriage is not to be treated as ‘void’ but small penalties may be attached to non-registration in an attempt to encourage registration[iv].

The Report examines in detail global practices regarding registration of marriages across the world, various Personal laws in India relating to the registration of marriages (The Indian Christian Marriage Act, 1872, The Kazis Act 1880, The Anand Marriage Act, 1909, The Special Marriage Act, 1954, The Hindu Marriage Act, 1955, etc.). It also examines the Acts and Rules enacted in various States and Union Territories in India to compulsorily register marriages. The major judicial decision on the subject came in Seema v Ashwani Kumar[v] when the Supreme Court directed that the States and the Central Governments to take steps to make marriages of all persons who are citizens of India belonging to various religions compulsorily registrable in their respective States. The Registration of Births and Death Acts, 1969, provides for Registration establishments consisting of Registrar-General, Chief Registrar and Registration Division and Registrars in each State and Union territory[vi]. The Report therefore recommended that the above Act be amended to include Registration of marriage as well within its scope so that existing administrative machinery is able to carry out registration of marriages in accordance with the specified procedures[vii].

The IT aspect and the recommendation regarding Aadhaar Integration

The Report clearly stated that the central purpose of the proposal of amendment is to create a central civil registration portal that consists of records of birth, marriage and death and to provide convenient access to the documents. It explicitly stated that “… if registration of marriage is linked to the unique identification number (UID), it would be possible to achieve universal tracing of records.”[viii] In the Chapter on conclusions and Recommendations, the Report maintains that compulsory registration of marriages is a necessary reform[ix] and that complete automation process may be adopted for facilitating paperless documentation to the greatest extent possible.

Reading from the recommendations, and in light of the Govt.’s move of integrating major social information relating to citizens with their respective UIDs, it is possible that the Law Ministry may choose to accept the LC’s Recommendation, in which case it would soon become mandatory to link Marriage Certificates with Aadhaar Cards.

It would have major implications on the privacy of all citizens, since it would mean that now the matrimonial details would also be added to the central repository which already has been linked with PAN, Mobile No, etc.

·         The most important implication is that of the impending risk of privacy infringement, considering that the cyber security laws and technologies are not always foolproof.

·         A positive aspect is that it will reduce the risk and chances of marriages under false identities and forced marriages.

·         The Govt will have solid and conclusive evidence regarding marriage disputes on the question whether such a marriage did indeed take place.

·         However, for this to come into practical application of linking Marriage Certificates to Aadhaar, first the Govt will have to ensure 100% enrollment of our population in Aadhaar, since the uniform application of the marriage law would depend on that too.

·         It is important to note that non-registration will not render marriages void, even if the compulsory provision comes into being. The Commission recommended[x] “retention of the provisions in the Registration of Birth and Death (Amendment) Bill, 2015 regarding (i) penalty of rupees five per day in case of non-registration of marriage without a reasonable cause..” but the penalty is not to exceed a maximum of Rs.100.

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INDIAN KANOON

[i] Para 1.16, Page 5 of the 270^th Report of the Law Commission of India, available at http://lawcommissionofindia.nic.in/reports/Report270.pdf

[ii] Para 1.17, ibid

[iii] Para 1.18, ibid

[iv] Para 3.2, Page 10, ibid

[v] 2006 (2) SCC 578

[vi] Para 6.5, Page 27, Supra Note iv

[vii] Para 6.6, ibid

[viii] Para 7.5, Page 33, ibid

[ix] Para 8.11, Page 37, ibid

[x] Para 8.12, ibid

CREDIT CARD TRANSACTIONS AND GST

GST has been in the limelight ever since it was proposed and it has more been so in the past few months. Recently on the midnight of June 30^th, India’s most celebrated and most anticipated economic reform of the century finally rolled out at the famous Central Hall of the Parliament which hosted the massive launch witnessed by a number of senior Govt officials, Political leaders, Ministers, etc. And as it always goes with any big event, GST is surrounded by a plethora of speculations and hoax news, one of which was that credit card transactions will be taxed twice. The same was clarified by the Revenue Secretary Dr. Hasmukh Adhia as being false, and ensured that the news was baseless, urging public to confirm with the authorities before sharing any such matter. The double taxation on credit card transactions simply turned out to be a bogus news spread on social media to wreak havoc and cause confusion amongst the general public.

Though it is true that the tax rate on the use of Credit Cards has been hiked to 18% from the previous 15%, increasing the end cost accruing upon such payments, you can heave a sigh of relief that it will not be charged twice like the hoax claimed. The GST Council has also stipulated the tax slab of 18% upon other transactions like banking, insurance premium payments, etc. and the same shall apply to loan processing fee, fund transfers, ATM withdrawals (beyond the maximum number of free transactions), SMS alerts, issue of Cheque Books/DDs, etc. Banks and Insurance Companies have communicated the change to their customers via E-Mails or SMS, and the implication on the hike on public and the market is yet to be analyzed. Whether any eventual benefit accruing due to the availability of Input Tax Credit on items which were not previously subject to the benefit would in turn be transferred to the consumers, and if so, how much time would elapse for this to come true, is to be seen in time.

Apart from the tax imposed on the service offered by the Bank to the Customer, there is no separate amount of tax that will be imposed on the individual card transactions entered into by the customer. The tax for the service is different from the amount of Merchant Discount Rate will only be charged by the bank against the merchant, and it will be passed on to the customer. The rate charged to a merchant by a bank for providing debit and credit card services[i], and this is previously agreed upon between the Bank and the Merchant while availing the service.

It is still not certain as to what amount of savings may eventually accrue from the credit input that may now be availed by the Banks, and only forecasts have been possible. Only those services that attract service charges would be liable to the new tax too, and rates like home/auto/personal loan EMIs will remain the same. On the other hand, one-time processing fees that are subject to service charges would be subjected to the hike. Term health Plans, ULIP (where charges apply), and Single Premium Plans would see a hike of 3 points from 15% to 18%; while Traditional Endowments and Single Premium Annuity Plans will see only a nominal increase.

In short, the new rates come with both a boon and a liability intertwined, in that certain service charge rates will go up, but it may be hoped that the input tax credit available to banks now will help to bring down the costs in time. Bottom liner goes that instead of believing every other exaggerated post on social media, it is better to refer to reliable documents published by the Authorities, to gather knowledge about GST (or any other Govt initiative, law or Rule, for that matter)! As for GST, please go through the CGST Act[ii], IGST Act[iii], the Rules[iv] and Rates[v] as published by the Office.

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INDIAN KANOON

[i] Merchant Discount Rate http://www.investopedia.com/terms/m/merchant-discount-rate.asp#ixzz4lrLLFBmg

[ii] The Central Goods and Services Tax Act 2017 (No. 12 of 2017)

[iii] The Integrated Goods and Services Tax Act 2017 (No.13 of 2017)

[iv] GST Rules, 2017

[v] GST Tax Rates, 2017

COW PROTECTION AND THE CONSTITUTION- AN ANALYSIS

One thing that has flooded the news channels with debates and discussions these days is the highly controversial ban that was imposed on the slaughter of cows and other cattle that indeed caused a “beef” between the Govt and the public. Much worse is the dangerous manifestation of communal intolerance wherein mobs of religious extremists masqueraded as patriots have resorted to publicly lynching and killing minorities on the allegation of cow slaughter. The impending culpable silence of the Govt was only recently broken when the Prime Minister finally chose to speak up and attempted to rein-in the saffron-clad army saying that “Killing people in the name of ‘gau bhakti’ is not acceptable. This is not something Mahatma Gandhi would approve”. When law and order is reduced to a silent spectator to the unreasonable hatred and mob-violence perpetrated on fellow human beings, justice is condemned to virtual non-existence in our country that had once prided itself for its varied cultures and unity in diversity.

The Constitutional Basis

The Constitution of India indeed contains a provision for the protection of cattle in the Directive Principles of State Policy[i], but it is no way a justification to the viciousness that has been unleashed on the beef-eating communities in India in the recent times. However, with the meat-eating community of India being of a large proportion, it is inappropriate that propaganda is being formulated and implemented against specific communities and minorities. In the light of all the political strife and communal and social unrest, it is important to have a look at the historical track of the “holy” relationship between cow and our Constitution. The story dates back to the earliest Hindu sentiments towards cows, intertwined with the position afforded to the animal in various epics and tales. It is interesting to note that cows even had a role in the unrest amongst the Hindu Sepoys in the Sepoy Mutiny of 1857 (better known as the First War of Indian Independence), since they were expected to bite off the paper cartridges (made of cow and pig fat) of ammunition that was provided to them. The Muslim counterparts also protested (biting off the paper made of pig fat was against Islamic religious mandates), and the combined effect in turn added fire to the Sepoys’ protest and uprise against the British Command. While history goes that the poor animals unknowingly played a major role in our fight against our oppressors, the current social situation in India is far from being anything justifiable.

The legal basis for the protection commences from the Constitutional Assembly Debates, with members like Seth Govind Das, Pandit Thakurdas, Shibban Lal Saxena, Ram Sahai and Raghu Vira who clandestinely petitioned for the inclusion of cow protection in our Constitutional scheme. The Draft Constitution of India did not contain any such provision, and the current presence of the same is the result of the pressure exercised by the Hindu Fundamentalists on the Assembly. The debate went through phases of rational and religious sentiments unraveling themselves in the course of the discussion, with the rationality resting on the economic advantages of cattle and citing examples of Mughal emperors who did not practice cow slaughter in their reign (religiousness never needed any logical backing up, and stood strong on the silent dominance exercised by the fundamentalist majority upon the minority). And there we have, the cow with a special protection right in our Constitution, while all the other poor animals of the Country are left to fend for themselves.

The Controversial Notification

The catastrophic move came from the Central Govt in the form of The Prevention of Cruelty to Animals (Regulation of Livestock Markets) Rules 2017 (INDIAN KANOON) by the Ministry of Environment, Forest and Climate Change (MoEFCC) published on 23^rd May 2017, and immediately caused mixed responses from various stakeholders. The Ministry issued a Press Release[ii] later clarifying that prime focus of the regulation is to protect the animals from cruelty and not to regulate the existing trade in cattle for slaughter houses.

However, nothing has so far stopped the cow-vigilantes from exterminating innocent people on the allegations of possession and consumption of beef, as evidenced by the alarming instances that come to light day by day.    

The Instances[iii]

·         In Assam, on April 20^th, 2017, two young men were allegedly killed by a mob of cow vigilantes, after being accused of trying to steal cows for slaughter.

·         In Assam on 1^st May 2017, two Muslim men were lynched in Nagaon district of Assam on suspicion of stealing cows. Though the police managed to rescue the men, both of them later succumbed to their injuries.

·         On June 22, 2017, three men were lynched in Islampur, Uttar Dinajpur for allegedly trying to steal cows.

·          On June 23^rd, 2017, on the Delhi-Ballabhgarh train, four men were lynched allegedly over rumors of beef eating.

·         On June 27^th, 2017, in Jharkhand, a 55-year-old dairy owner Usman Ansari was beaten up and his house was set on fire by mobs because a headless carcass of a cow was found near his house and the Police had a tough time rescuing the victim.

·         On June 29^th, 2017, in Jharkhand, Alimuddin alias Asgar Ansari was beaten to death by mobs for allegedly carrying beef.

The conscience of India has not yet revived from the shock of the young teenage boy Junaid who was beaten to death on a train from Delhi to Mathura just prior to Eid. And the very next week another man was attacked in the name of the holy cow; which the when the Prime Minister chose to express his reproach finally. Though cases have been registered and the Police are apparently trying to curb the situation, it is quite evident that the religious fanatics camouflaging as animal protectors are refusing to stay low easily, and the secularist (more so, pluralist) system that our Country was founded on, is being mocked by these anti-social elements. The line between nationalism and Right-winged fundamentalism has now dangerously blurred, and is threatening the very integrity of India. The religious oppression that is being passed off as animal protection is taking over the social and political spectra, dampening the more serious issues our country is faced with.

Ironically enough, the poor harmless creatures who would prefer to have nothing to do with any bloodshed, do not realize the amount of bloodshed that is being carried out in their name by zealots and political leaders manipulating the system. This, in a country where endangered animals are still hunted and poached and other animals are free to be slaughtered and eaten.  On another note, the legislators are lucky enough that animals are not capable of claiming an equal protection of the said law, since one might safely argue that religious worship is really not a basis of reasonable discrimination under Art. 14; and if all the efforts are indeed for the protection of animals, let’s do better than lynching innocent people to death.

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[i] Art. 48, Constitution of India: “The State shall endeavor to organize agriculture and animal husbandry on modern and scientific lines and shall, in particular, take steps for preserving and improving the breeds, and prohibiting the slaughter, of cows and calves and other milch and draught cattle“.

[ii] Rules on prevention of cruelty to Animals (Regulation of Livestock Market) to ensure welfare of Animals & Protect Animals from Cruelty: Environment Ministry, Press Information Bureau, on 27-May-2017 18:06 IST

[iii] Source: Wikipedia (News)

THE TIERS OF GST- AN OVERVIEW FOR THE COMMON MAN

Whereas it has been ubiquitously accepted and stated that the new scheme under GST will replace the multiple taxation system currently in place in India, it has also been realized that the new system would also be implemented on a tier-based manner, where the Centre and State will both replace their own multiple taxation with GST, whereby there will be a Centrally administered CGST and a State-administered SGST simultaneously operating in the market. The taxes that will be subsumed by the SGST include State Value Added Tax/Sales Taxes, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, and Taxes on lottery, betting and gambling. The CGST will absorb Central Excise Duty, Additional Excise Duty, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, and Special Additional Duty of Customs[i]. Both the CGST and the SGST will be levied simultaneously on every transaction of supply of goods and services except on exempted goods and services, goods which are outside the purview of GST and the transactions which are below the prescribed threshold limits. In addition to the SGST and CGST that will be simultaneously charged on intra-State supplies, and IGST (Integrated GST) that will be levied on inter-State supply of goods and services.

CGST:

It is the tax levied by the Centre on the intra-state supply of goods and services, under the CGST Act[ii]. The Centre and State both simultaneously tax intra-State transactions and share the revenue between them by way of a revenue-sharing agreement. CGST applies to both goods and services, and  makes a provision for levy and collection of tax  by the Central Government and for matters connected therewith or incidental thereto. By a Notification of the Central Board of excise and Customs on 19^th June 2017[iii], a Common Goods and Services Tax Electronic Portal[iv] for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax and electronic way bill has been introduced. The seller at each stage can avail a credit on input tax as against output tax, facilitating to curb the cascading effect of previous taxation scheme to some extent. The Schedules to the Act specify and enlist the status of various activities and transactions that will be regarded as “supply” of goods or services, or neither, as the case may be.

SGST:

This is the rate of tax leviable by the States on intra-State sale of goods and services, administered by the respective State Govt. in each State. The tax credit in respect of SGST can be set off only against CGST and IGST, and is subject to the compliance with respect to the invoice and returns requirements. Each State has to frame and enact an SGST Act of its own. The Union Territory Goods and Services Act has been enacted by the Centre to govern the imposition of GST on Union territories of the Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli, Daman and Diu, Chandigarh and other territory.

IGST:

Integrated GST is the tax levied under the IGST Act[v] on the supply of goods and/or services, in the case of inter-State trade across India. It also includes the supply of goods or services in the course of import into India and export from India. IGST would replace the current Central Sales Tax that is levied on inter-State sale of goods and services. The IGST would also be shared between the Central and State Govts. The input credit for IGST may be adjusted against CGST, SGST or IGST. IGST will not be imposed as a third tax in addition to any other tax, but only as the single tax levied on inter-State sales of goods and services.

The taxation scheme that has gone live today is indeed a moment that the Indian economy had waited for eagerly, and its practical impacts are yet to be seen. However, the public vigor to welcome GST has been evident since the idea was introduced, with public opinion ranging from blatantly whimsical speculations to proper economic forecasts doing its rounds on the internet and elsewhere. Now that it has finally seen daylight, we need to let GST take over the market and come into full-swing operation, to see how the market responds.            

                                                                                                                                         

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INDIAN KANOON

[i] Source: Frequently Asked Questions (FAQs) on Goods and Services Tax (GST), Press Information Bureau, Government of India, Ministry of Finance, posted on 03-August-2016

[ii] THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 (NO. 12 OF 2017) published in the Gazette of India on 12^th April 2017

[iii] Notification No. 4/2017 – Central Tax, by the DEPARTMENT OF REVENUE, Ministry of Finance.

[iv]  www.gst.gov.in

[v] THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017 (NO. 13 OF 2017), published in the Gazette of India on 12^th April 2017