Union territories without Legislature – how GST can apply

September 23,2016
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Amitabh Khemka, COO, Sthir Advisors LLP

1.       Power to make laws with respect to GST

As per the Constitution of India[1], the Parliament and the Legislature of every State have the power to make laws with respect to goods and services tax (GST); however, Parliament has exclusive power to make such laws for inter-State trade or commerce[2].  ‘State’ is defined[3] for this purpose to include a Union territory with Legislature.  GST will mean[4] any tax on supply of goods, or services, or both except …. .

2.       Issue arising 

As the definition of ‘State’ for the purposes of GST does not include the Union territory WITHOUT Legislature, the question that arises is – will GST apply on supplies in/from/to the Union territories without Legislature?

3.       Union territory

India is a Union of States.  The territory of India comprises of the territories of the States and the Union territories[5].  Currently, there are 29 States and seven Union territories; of which, two (Delhi and Puducherry) are having Legislature.  Union territory[6] is administered by the President of India, acting through an administrator appointed by him.

4.       Power to make laws

Currently, the subject matter of laws to be made[7] by Parliament and by the Legislature of States is as follows:

Art.

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