The Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017

Summary of the Goods and Services Tax (Compensation to States) Act, 2017
Objective: Compensate Indian States for revenue losses due to GST implementation, alongside ensuring anti-profiteering measures are indirectly supported by maintaining state financial stability.
Key Provisions Relevant to Anti-Profiteering Context
1. Stable Revenue for States *Compensation Framework: Ensures states do not face significant revenue shortfalls, potentially allowing for more consistent policy-making, including those related to anti-profiteering.
2. Calculation of Compensation *Projected vs. Actual Revenue: Mechanism to adjust for shortfalls, which could indirectly influence states' ability to regulate and enforce anti-profiteering laws effectively.
3. Funding Mechanism and Its Implications *GST Compensation Cess: While not directly an anti-profiteering tool, the cess on specified goods/services could influence pricing strategies, with the intent of preventing undue profit at the consumer's expense. *GST Compensation Fund: Management of funds ensures transparency, a principle also crucial in anti-profiteering enforcement.
4. Duration and Settlement in Relation to Market Stability *5-Year Compensation Period: Provides a timeframe for states to adjust and potentially implement more effective anti-profiteering measures as the GST ecosystem matures.

Legislative History:

The Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017

Short Title The Central Goods and Services Tax (Extension to Jammu and Kashmir) Act, 2017

Act Number / Year Act No. 26 of 2017

India Code Act ID 201726

Presidential Assent Date August 23, 2017

Enforcement Date Deemed to have come into force on July 8, 2017

Nodal Ministry Ministry of Finance

Precedent & Statutory Rationale

1. Integration of Jammu & Kashmir into the National GST Framework:

o When the nationwide GST rollout occurred on July 1, 2017, the original CGST Act excluded the State of Jammu and Kashmir due to special constitutional requirements under Article 370 requiring a formal resolution by the State Legislative Assembly.

2. Prevention of Economic Isolation & Double Taxation Frictions:

o Following the J&K State Assembly passing a resolution endorsing the GST framework on July 6, 2017, an extension act was required to prevent trade barriers, loss of Input Tax Credit (ITC) for interstate transactions, and disruption of goods moving in and out of the State.

3. Statutory Confirmation of Presidential Ordinance:

o Promulgated initially via Executive Ordinance on July 8, 2017, this Act provided permanent parliamentary authorization to ensure statutory continuity for CGST collections across J&K.

Parliamentary Trajectory & Enactment

• Formulation: Formulated and piloted by the Ministry of Finance under Finance Minister Arun Jaitley following formal concurrence from the Jammu & Kashmir State Government.

• Parliamentary Passage: Introduced in the Lok Sabha on August 1, 2017; debated and passed by the Lok Sabha on August 2, 2017; considered and returned without amendments by the Rajya Sabha on August 8, 2017.

• Presidential Assent: Received formal Presidential Assent on August 23, 2017, entering the statute book as Act No. 26 of 2017.

• Enforcement: Retrospectively brought into operational force effective July 8, 2017.

• Source: India Code Official Repository and Ministry of Finance (Department of Revenue / CBIC) Official Records