Why was constitutional amendment needed for introducing GST?

States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.

GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.

The Empowered Committee of Finance Ministers had recommended for constitutional amendment.

The GST Council had recommended for constitutional amendment so that its power enhances.

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This question was previously asked in

UPSC CDS-2 – 2017

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Constitutional amendment was needed for introducing GST primarily because the existing distribution of taxation powers between the Union and the States, as defined in Article 246 and the Seventh Schedule of the Constitution, did not allow for a concurrent tax like GST covering both goods and services. Before GST, the Union had powers to tax manufacturing and services, while states had powers to tax sales within their territory. To subsume multiple taxes into one and allow both the Union and States to tax the same base (supply of goods and services), the Constitution had to be amended to create specific provisions granting this concurrent power. Article 246 was inadequate for such a concurrent base.

The Goods and Services Tax (GST) is a concurrent tax on the supply of goods and services, requiring a constitutional amendment to grant concurrent taxing powers to both the Union and the States, which was not possible under the original framework of Article 246 and the Seventh Schedule.

The Constitution (One Hundred and First Amendment) Act, 2016 introduced GST by inserting Article 246A, which grants concurrent powers to the Parliament and State Legislatures to make laws with respect to GST levied on every supply of goods or services or both. It also made necessary amendments to other articles and the Seventh Schedule.

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