Procedure for the Apportionment of Integrated Goods and Services Tax

Abstract

The July 2017 Reform relies upon “Integrated Goods and Services Tax” (IGST) as the pivot. Every “supply” of goods and/or services has a “place of supply” as destination and the State in which it is located is taken as its “destination State”. Reliance on IGST is expected to enable the overlap, without any “repugnance” constraint, of the legislative competences of the Union and every destination State in concurrently levying and collecting every central and state Goods and Service Taxes (CGST and SGST). Since the Union would share the political space reserved for States to levy and/or collect pre-GST taxes on a sub-set of supplies, the Reform is designed to avoid harm to the “interests” of the States as secured in Article 274. IGST is therefore required to be “apportioned” to the Union and every destination State to enable the computation of sums of moneys to form part of the respective Consolidated Funds. “Apportionment” of IGST is different from the “assignment” to the collective of all States, subject to “distribution” of the assigned tax revenues (including revenues forming part of the Consolidated Fund of India in consequence of apportionment of IGST to the Union), to every State in the collective. This paper considers the procedure for apportionment of IGST in the light of legislative history leading to the Reform and of the applicable norms of statutory interpretation. Key words: Apportionment, Assignment, Integrated Goods and Services Tax.