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Does GST Achieve What Our Constitution Makers Wanted?

GST Indian constitution

The makers of the Indian Constitution had envisioned for the free flow of trade across the length and breadth of the country. To ensure this, they had provided for articles 301-307 under Part XIII of the Indian Constitution. Freedom of inter-state trade, commerce, and intercourse was their vision towards bringing states closer to each other and promoting harmony between them.

Although, under article 19(g), citizens have a fundamental right to practice any business of their choice subject to reasonable restrictions, it is this part XIII that specifically deals with freedom of trade.

Apart from many other provisions, an authority on inter-state trade had also been envisioned under article 307. This body, according to the Constitution makers, could have supervised the enforcement of provisions under articles 301-306.

But it is surprising to know that no such body could ever be constituted. The myriad system of multiple taxes and different rates of the same taxes had complicated trade so much that long queues of trucks at the state borders became a common phenomenon.

Other than the complicated tax regimes in different states, the need for formulation of inter-state trade policies that respect the federal structure of the Indian state has been another area of concern in ensuring smooth inter-state trade.

In sum, this significant part of the constitution remained virtually unimplemented. It is not only that the vision of the leaders of that era remained unfulfilled, but also the very idea of seamless interstate trade got ignored for 70 long years.

In this context, Goods and Services Tax (GST), a constitutional amendment after a consensus between states and the Centre, has proved to be a boon to inter-state trade. We have explained in one of our earlier articles that how Prime Minister Modi was able to accomplish the Himalayan task in only the first three years of his tenure, a reform which had remained pending since 2000.

Strengthening the Federal structure

GST has ended the disparities in tax regimes across the states except on few products falling outside its ambit, making the whole nation one unified market. This strengthens our federal structure, giving both the Union and states an equitable voice.

Life to Part XIII (Article 301-307) of Constitution

GST Council, a constitutional body, has been set up under ‘The Constitution (One Hundred and First Amendment) Act, 2016’with representation from both states and the center to ensure smooth implementation of the tax. This council can be seen as analogous to the body prescribed under Article 307 of the Constitution at least in spirit. Thus, the council virtually brings Article 307 of the Constitution to life.

This council has met 35 times so far and taken many significant decisions to not only lower the tax rate but also to ease the transportation of goods across the country.

The introduction of e-way bill and reduction in queues of the trucks at the state borders have brought in more efficiency, ensuring easy flow of goods and services. This is nothing short of realizing the dreams of Constitution makers, of moving towards a unified market.

Economic and Social Justice

Lowering of the tax rate on common goods and services and the progressive principle of GST (luxury goods being taxed more) realises the core values of social and economic justice as enshrined in the preamble of the Constitution.

Even other aspects of GST can be traced to the core values and principles of the Indian Constitution. Legislations like GST should not only be seen in terms of reform, but also from the viewpoint of values and principles that our Constitution makers have based our nation upon.