ERRONEOUS CAPITAL PUNISHMENT IN INDIA

A term paper Submitted to

AMITY LAW SCHOOL, LUCKNOW
In Partial Fulfilment of the Requirement of the B.Com.LL.B(H) Course

Supervised by:- Submitted by:-

Mr.AshishPathakNishant Sharma

Lecturer Course- B.Com.LL.B(H)

Amity Law School, LucknowSemester- IXth

Enroll No.-A8121611042

AMITY UNIVERSITY, UTTAR PRADESH

LUCKNOW CAMPUS

2015
 Dated: ______________

CERTIFICATE
This is to certify that Nishant Sharmahas written his dissertation
entitled “Erroneous Capital Punishment in India” in partial
fulfilment for the award of Degree of B.Com.LL.B(H), under my
supervision and guidance.

I am pleased to have supervised the work of Nishant Sharma the

outcome of which is presented here in the form of this dissertation.
I am exceedingly glad to note that he has put in hard work,
sincerely collected the relevant material from various sources and
analysed it precisely for the purpose of this work. He has discussed
important issues in an objective and dispassionate manner. He has
also presented the subject in a very lucid, concise and
comprehensible language and in a systematic form.
 Dated: ___________

ACKNOWLEDGEMENT

“It is not possible to prepare Term Paper without the assistance and
encouragement of other people. It is certainly no exception”
On the completion of this project, I feel indebted to all those who proved
instrumental for the completion of this project and hence would like to
thank them all for making my endeavours worthwhile.

I wish to express my deep sense of gratitude to my Internal Guide,

Mr.AshishPathak,Lecturer at Amity University, Uttar Pradesh, Lucknow
Campus for his able guidance and useful suggestions, which helped me
in completing the term paper in time. It is because of his mature, able
guidance, constant encouragement and inspiration that I have been able
to accomplish this task.

At Last I would also thank my Institution and faculty members without

whom this project would have been a distant reality. I also extend my
heartfelt thanks to my family and well-wishers.

Nishant Sharma
 INTRODUCTION

Goods and Services tax (GST) has been identified as one of most
important tax reforms post-independence. It is a tax trigger, which will
lead to business transformation for all major industries.
Given the passage of the Constitution (101st) Amendment Bill, 2016 for
GST in the Parliament on 8 August 2016, ratification of the said Bill by
more than 15 states by early September followed by its enactment, and
passage of four GST Bills in the Lok Sabha on 29 March 2017 and
Rajya Sabha on 6 April 2017, with the clear road map being laid down
by the Finance Ministry, the Government of India seems to be on course
to implementing GST with effect from 1 July 2017.
The GST Council consisting of representatives from the Centre as well
as the states, after being constituted, met on twelve occasions to discuss
various issues including dual control, GST laws, exemptions, thresholds,
rate structure, compensation cess etc. and reached consensus on the
same. Council has also recommended four-tier GST rate structure and
the thresholds.
The Bills introduced in the Lok Sabha, during the ongoing Budget
session of the Parliament, include Central GST (CGST), Integrated GST
(IGST), Union Territory GST (UTGST) and the Bill for Compensation
to States. Discussion on the Bills commenced on 29 March 2017 and
were passed on the same day after a long debate. According to media
reports, the GST Bills, although introduced as Money Bills, shall be
taken up for discussion in both houses of the Parliament before their
passage in the current session. The Bills were earlier cleared by the GST
Council, followed by a Union Cabinet approval.
The revised draft of the Model GST law, which was released in the
public domain in November 2016, has been split into CGST, SGST and
UTGST Bills apart from IGST Bill. The draft of the Model GST Law
underwent further changes before being introduced in the Parliament.
Union territories with legislature, i.e., Delhi & Puducherry, will adopt
SGST Act and the balance 5 Union territories without legislatures will
adopt UTGST Act.
Meanwhile, Centre and States have already begun the enrolment process
for migrating existing taxpayers to the proposed tax regime through GST
common portal.
GST is a comprehensive indirect tax on manufacture, sale and
consumption of goods and services throughout India (Except state
of Jammu and Kashmir) , to replace taxes levied by
the central and state governments.
This method allows GST-registered businesses to claim tax credit to the
value of GST they paid on purchase of goods or services as part of their
normal commercial activity. Administrative responsibility would
generally rest with a single authority to levy tax on goods and
services. Exports would be considered as zero-rated supply and imports
would be levied the same taxes as domestic goods and services adhering
to the destination principle in addition to the Customs Duty which will
not be subsumed in the GST.
Introduction of Goods and Services Tax (GST) is a significant step in
the reform of indirect taxation in India. Amalgamating several Central
and State taxes into a single tax would mitigate cascading or double
taxation, facilitating a common national market. The simplicity of the
tax should lead to easier administration and enforcement. From the
consumer point of view, the biggest advantage would be in terms of a
reduction in the overall tax burden on goods, which is currently
estimated at 25%-30%, free movement of goods from one state to
another without stopping at state borders for hours for payment of state
tax or entry tax and reduction in paperwork to a large extent.
 HISTORY

In India, GST was conceived in 2004 by the Task Force on

implementation of the Fiscal Responsibility and Budget Management
Act, 200316 (Kelkar Committee) while analyzing prevailing indirect tax
system both at Central and State level. The Kelkar Committee observed
that a tax reform of nationwide dual GST which would comprehensively
tax the consumption of almost all goods and services in the economy
would be able to achieve ‘a common market, widen the tax base,
improve the revenue productivity of domestic indirect taxes and
enhance welfare through efficient resource allocation’. The existing
Indian Indirect tax structure empowers levy of taxes by Central
government on manufacturing of goods and supply of services like
Customs duties, Central Excise duty, Service tax etc; and State
governments on goods at point of sale such as state VAT, Entry Tax,
Octroi etc. Multiplicity of taxes and tax base being fragmented between
Centre and States have resulted in a complex system of interconnected
legislations leading to substantial distortions, cascading of taxes and
adversely effecting growth in Gross Domestic Production (GDP). Some
of the limitations of the prevailing Indirect tax structure are:

• Central Value Added Tax (CENVAT) structure does not tax value
addition post the stage of production,

• CENVAT portion of input goods remains included in the value of

goods to be taxed under State VAT contributing to that extent a
cascading effect on account of CENVAT element.
 • No integration of VAT on input goods with service tax on services at
the State level thereby causing cascading effect of service tax.

The proposed GST is consumption type VAT where only final

consumption is treated as the final use of a good. GST is expected to
integrate taxes on goods and services across all supply chain for availing
set-off and capture value addition at each stage. A continuous chain of
set-off is expected to be established from the original producer's
service provider's level upto the retailer's level which would eliminate
the burden of all cascading effects. Suppliers at each stage would be
permitted to set-off the GST paid on the purchase of input goods and
services against GST to be paid on the supply of goods and services. GST
Model Proposed for India Based on the recommendations, the
Government constituted an Empowered Committee comprising of
State Finance Ministers (Empowered Committee) to prepare a Design
and Road Map for the implementation of GST. Salient features of the
proposed GST model based on reports of Empowered Committee are
summarized below:

1. Aligned with the federal structure of the Indian government, GST

model is proposed to be a dual structure (like in Canada) to be levied
and collected by the Union government [referred to as Central GST
(CGST)] and respective State governments [referred to as State GST
(SGST)]. This dual GST model would be implemented and governed by
one CGST/IGST statute applicable across the country, SGST statutes for
each State, common rules determining valuation, place of supply, place
of origin etc. This would imply that the Centre and the States would
have concurrent jurisdiction for the entire value chain and the basic
principles of law such as chargeability, definition of taxable event and
taxable person, measure of levy including valuation provisions, basis of
classification, etc. shall be uniform across State statutes. It has been
reported that draft laws are already ready and under internal
discussions. Also, various allied rules are in the process of being drafted
and finalized.

2. CGST and SGST would be comprehensively applicable to all goods

and services upto the final consumer (retail level), reflecting the tax
base of a typical consumption VAT. Thus, CGST and SGST would be
applicable to all 16 Headed by Dr. Vijay L. Kelkar published its report on
July 2004 transactions involving supply of goods and services made for
a consideration (except alcoholic liquor for human consumption) and
the exempted goods and services, goods which are outside the purview
of GST and the transactions which are below the prescribed threshold
limits. Based on recommendations of both the 13th Finance
Commission and Empowered Committee, GST on following products
shall be levied from a date to be notified by the GST Council •
Petroleum Crude • High Speed Diesel • Motor Spirit (commonly known
as Petrol) • Natural Gas • Aviation Turbine Fuel

3. GST to be structured on the destination principle so that the tax base

shifts from production to consumption whereby imports will be liable
to tax and exports will be relieved of the burden of GST. Consequently,
revenues will accrue to the State in which the consumption takes place
or is deemed to take place.

4. Taxes paid on input goods/services against CGST shall be allowed to

be utilized as input tax credit (ITC) against output tax liabilities under
CGST and same principle applies to SGST. Cross utilization of input tax
credit between the Central GST and the State GST would not be
allowed except in case of inter-state supply of goods and services. .
Therefore, a taxpayer or exporter shall be required to maintain
separate details in books of account for utilization or refund of credit.

5. In order to maintain uninterrupted credit chain, CST would be

phased out in case of inter-state transactions of taxable goods. On such
transactions, Centre would levy Integrated GST (referred to as IGST
which would be CGST plus SGST) with appropriate provision for
consignment or stock transfer of goods and services. The inter-state
seller will pay IGST on value addition after adjusting available credit of
IGST, CGST, and SGST on his purchases. The importing dealer will claim
credit of IGST while discharging his output tax liability in his own State.
The relevant information will also be submitted to the Central Agency
which will act as a clearing house mechanism, verify the claims and
inform the respective governments to transfer the funds
 WHY IT HAS BEEN INTRODUCED BY THE
GOVERNMENT?

The proposed GST is expected to streamline the indirect tax regime. It

contains all indirect taxes levied on goods, including central and state-
level taxes. Billed as an improvement on the VAT system, a
uniform GST is expected to create a seamless national market.
Through a tax credit mechanism, this tax is collected on value-
added goods and services at each stage of sale or purchase in the
supply chain.
Not only it will replace Central Indirect taxes but will replace state
levied indirect taxes too. Experts say that GST is likely to improve tax
collections and boost India’s economic development by breaking tax
barriers between States and integrating India through a uniform tax rate.
France was the first country to introduce it. In India, a dual GST is
being proposed wherein a central goods and services tax (CGST) and a
state goods and services tax (SGST) will be levied on the taxable value
of a transaction.
Features of GST:

 It will be collected on VAT method ie tax at every stage of value

addition.
 It will be imposed at an uniform rate @ 20% (Centre state share
= 12 and 8 percent respectively)

TIMELINE of GST

2000: NDA setup empowered committee under Asim Das Gupta to

design GST model. 2006-07 Then, Union Finance Minister Mr
Chidambaram announced GST would be implemented from Apr 1 ,
2010 and asked the empowered committee with state finance ministers
to submit their views.

2009
1.Committee of Principle Secretaries of the states setup
2.Detailed Discussion Papers prepared
3. Tax Rate Proposal : World over mostly the GST rates are between
15-20% and the same is expected for India too

2011: Constitution 115th Amendment Bill introduced to enable state

legislatures to frame laws for levying GST
1. It seeks to enable The President of India to setup within 60 days of
passage of the bill a GST COUNCIL with Union Finance Minister as
Chairperson & MoS for Revenue + Finance Ministers of all the states as
members. GST Council will thus work on GST rates , exemption lists
etc.
2. Setup a GST DISPUTES SETTLEMENT AUTHORITY : with a
chairperson and 2 members.
3. It was referred to the Parliamentary Committee on Finance for
examinations.
· It recommended that sections proposing a Dispute
Settlement Authority to decide disputes arising among states and take
action against the states should be removed from the Bill, and that the
GST Council itself should evolve a mechanism to resolve the disputes.
· The committee also recommended that decisions in the GST
Council be taken by voting and not by consensus. It said one-third
weightage for central representatives and two-third weightage for state
representatives may be provided, with the decision taken by the Council
being passed with more than three-fourth votes of the representatives
present. The quorum for holding meetings of the Council is proposed to
be raised to half from one-third.

2011
GST NETWORK : IT strategy of GST led by the AADHAR team.
Objective : Common portal for centre and states to enable electronic
processing of registrations, returns , payments etc.
NSDL (National Securities Depository ltd.) : technology partner to
operate as IT backbone of GST.

2012
Finance ministry formed a committee of seven members under the
chairmanship of Yogendra Garg, commissioner export, Mumbai,
to frame a model legislation of GST for the Centre. 2013 The Goods
and Services Tax Bill is likely to be taken up in the Parliament

Rational or Apprehensions behind the proposal:

1. The States feel that when 246A is there, then the Centre should
not have to incorporate GST into the Union List. Clause 246A
proposes additional powers to the Centre to tax sale of goods
and for the States (to tax services).
2. At present, the Centre can tax services but not sale
and distribution of goods. The States can now tax sale and
distribution of goods but not services.
3. Including GST in the Union List will imply that in case of
any disagreement between the Centre and the States,
Parliament’s decisions will be overriding and binding on the
States.
4. Administrative mechanism: In India, a merger between two
government agencies is next to impossible, as long as appraisals
and promotions are linked to seniority and regretfully,
not performance. And integrating the revenue collection services
of all states and an extremely powerful Central Service into one
GST collection agent.
5. Federal structure of the Indian constitution. Taking away the
power of the states to tax items under the state list is tantamount
to infringing upon the basic structure of the Constitution.
Why are some States against GST; will they lose money?
 The governments of Madhya Pradesh, Chhattisgarh and Tamil
Nadu say that the “information technology systems and the
administrative infrastructure will not be ready by April 2010 to
implement GST”.
 States have sought assurances that their existing revenues will be
protected.
 The central government has offered to compensate States in case
of a loss in revenues.
 Some States fear that if the uniform tax rate is lower than
their existing rates, it will hit their tax kitty. The government
believes that dual GST will lead to better revenue collection for
States.
 However, backward and less-developed States could see a fall in
tax collections. GST could see better revenue collection for
some States as the consumption of goods and services will rise.
PROBLEMS IN THE CURRENT TAXATION SYSTEM GST
PLANS TO IMPROVE

1. Ambiguous definitions- Taxation at Manufacturing Level is

levied on goods manufactured or produced in India which
gives rise to definitional issues as to what constitutes
manufacturing.
2. Less Complexity-A strong single taxation system wherein
various Central and State statutes will be subsumed into
one comprehensive enactment. Process of judicial decisions
would be speedy too with one statute covering all aspects of
indirect taxes.
3. Exclusion of Services from state taxation- Services remain
outside the scope of state taxation powers and GST would
include tax on all such services where states cannot legislate.
What are the benefits of GST?

 Under GST, the taxation burden will be divided equitably

between manufacturing and services, through a lower tax rate by
increasing the tax base and minimizing exemptions.
 GST will be is levied only at the destination point, and not at
various points (from manufacturing to retail outlets).
 Currently, a manufacturer needs to pay tax when a finished
product moves out from a factory, and it is again taxed at the
retail outlet when sold.
 It is expected to help build a transparent and corruption-free tax
administration.
How will it benefit the Centre and the States?

 It is estimated that India will gain $15 billion a year

by implementing the Goods and Services Tax as it would
promote exports, raise employment and boost growth.
 It will divide the tax burden equitably between manufacturing
and services.
What are the benefits of GST for individuals and companies?

 In the GST system, both Central and State taxes will be collected
at the point of sale.
 Both components (the Central and State GST) will be charged on
the manufacturing cost. This will benefit individuals as prices
are likely to come down. Lower prices will lead to more
consumption, thereby helping companies.
 Thus, the prices of commodities are expected to come down in
the long run as dealers will be allowed to avail the CENVAT
credit of Excise duty paid by Manufacturers and more over he
will be allowed to avail the CENVAT credit of tax paid on
services also. This passing of the benefits of reduced tax
incidence to consumers by slashing the prices of goods will
definitely reduce the prices.
Implications of GST on imports and exports

 Imports would be subject to GST.

 Exports, however, will be zero-rated, meaning exporters of goods
and services need not pay GST on their exports. GST paid by
them on the procurement of goods and services will be refunded
as similar to the present scenario.
 ADVANTAGES

As the Rajya Sabha prepares to pass the constitutional amendment

paving the way for the goods and services tax (GST), the reform is
expected to bump up GDP by about a percentage point or even more.
Here's a look at GST's benefits.

1. Life gets simpler

GST will replace 17 indirect tax levies and compliance costs will fall

2. Revenue will get a boost

- Evasion set to drop - Input tax credit will encourage suppliers to pay
taxes - States and Centre will have dual oversight - The number of tax-
exempt goods will decline.
3. A common market
It's currently fragmented along state lines, pushing costs up 20-30%

4. Logistics, inventory costs will fall

Checks at state borders slow movement of trucks. In India, they travel
280 km a day?? compared with 800 km in the US

5.Investment boost
For many capital goods, input tax credit is not available. Full input tax
credit under GST will mean a 12-14% drop in the cost of capital goods.
Expected: A 6% rise in capital goods investment, 2% overall.

6. Make in India
Manufacturing will get more competitive as GST addresses cascading of
tax, inter-state tax, high logistics costs and fragmented market b)
Increased protection from imports as GST provides for appropriate
countervailing duty.

7. Less developed states get a lift

The current 2% inter-state levy means production is kept within a state.
Under the GST national market, this can be dispersed, creating
opportunities for others

8. Manufactured goods could become cheaper Lower logistics and

tax costs

9. GDP lift HSBC estimates an 80 basis point rise in GDP growth over
3-5 years. NCAER pegs this at 0.9-1.7% thanks to the elimination of tax
cascading

10. Freeing up online State restrictions and levies have complicated

ecommerce. Some sellers do not even ship to particular states. All this
will end with GST

Potential Pitfalls Once the Upper House passes the amendment, there's
a long way to go and much work to be done before the government's
April 1, 2017, deadline can be met. Factors that could trip up GST:
- The actual regime may not be the best possible - Too many exemptions
could undermine the levy - Goods like petroleum, alcohol and tobacco
may be excluded - A high tax rate would stoke inflation as service taxes
will rise more steeply - Fiscal stress if expected collection efficiency
doesn't materialize early
..