The Union Territory Goods and Services Tax Act, 2017

Summary of the Union Territory Goods and Services Tax Act, 2017
Purpose:
To levy and collect tax on intra-State supply of goods or services within Union Territories.
Key Points:
1. Applicability:
Extends to specified Union Territories (e.g., Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Ladakh, Chandigarh, etc.).
2. Taxation:
Union Territory Tax (UT Tax): Imposed on intra-State supplies, excluding alcoholic liquor for human consumption and specified spirits.
• Tax Rate: Not exceeding 20%, as notified by the Central Government based on the GST Council's recommendations.
3. Provisions: - Reverse Charge Mechanism: Applies to specified goods/services categories.
• Exemptions: Granted by the Central Government on the GST Council's recommendations.
• Alignment with Central GST Act: Provisions of the Central Goods and Services Tax Act, 2017, apply with modifications.
4. Administration:
• Commissioner of Union Territory Tax: Oversees tax administration.
• Rule Making Authority: Central Government and the GST Council.
5. Objectives:
Simplification of Indirect Tax Regime
• Reduction in Production Costs and Inflation
• Enhancement of Competitiveness of Indian Trade and Industry

Legislative History:

The Union Territory Goods and Services Tax Act, 2017

Short Title The Union Territory Goods and Services Tax Act, 2017

Act Number / Year Act No. 14 of 2017

India Code Act ID 201714

Presidential Assent Date April 12, 2017

Enforcement Date June 22, 2017 (for preliminary provisions vide S.O. 1974(E)); July 1, 2017 (for full operational tax levy vide S.O. 2070(E))

Nodal Ministry Ministry of Finance

Precedent & Statutory Rationale

1. Parity with State GST (SGST) for Non-Legislative Union Territories:

o Enacted to levy UTGST on intra-UT supplies of goods or services in Union Territories that do not have their own Legislative Assembly (e.g., Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Chandigarh, and Ladakh).

2. Mirror Architecture of the CGST Act:

o Designed to mirror the provisions, procedural mandates, valuation rules, and administrative mechanics of the Central Goods and Services Tax Act, 2017 to ensure a uniform tax burden across the entire country.

3. Prevention of Double Taxation:

o Ensured that transactions within non-legislative UTs pay CGST + UTGST (equivalent total rate as CGST + SGST in States), upholding full credit fungibility for registered businesses located in these territories.

Parliamentary Trajectory & Enactment

• Formulation: Drafted under the direction of the GST Council to complete the legal infrastructure for non-legislative Union Territories.

• Parliamentary Passage: Introduced in the Lok Sabha as a Money Bill on March 27, 2017; debated and passed by the Lok Sabha on March 29, 2017; returned without amendments by the Rajya Sabha on April 6, 2017.

• Presidential Assent: Received formal Presidential Assent on April 12, 2017, entering the statute book as Act No. 14 of 2017.

• Enforcement: Enforced on June 22, 2017 (for preliminary provisions vide S.O. 1974(E)); July 1, 2017 (for full operational tax levy vide S.O. 2070(E))

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