Tax Laws and Practice · Concept of Indirect Taxes at a Glance

Constitutional Framework of Indirect Taxes in India

Q: What did the 101st Constitutional Amendment do?

It introduced GST by amending the Constitution. It inserted Article 246A, Article 269A and Article 279A, defined GST in Article 366(12A), and changed the Union and State List entries so that taxes on goods and services could be combined into GST.

Q: Who are the members of the GST Council?

The Union Finance Minister is Chairperson. The Union Minister of State in charge of Revenue or Finance is a member. Each State Government nominates its Minister in charge of finance or taxation, or another Minister. The members choose a Vice-Chairperson from the State Ministers.

Q: What is the quorum and the voting rule of the GST Council?

The quorum is one-half of the total members. A decision needs at least three-fourths of the weighted votes of members present and voting. The Centre's vote is one-third of the total and the States' votes together are two-thirds.

Q: Under which entry does Parliament levy customs duty?

Entry 83 of the Union List gives Parliament the power to levy duties of customs including export duties. Basic customs duty is levied under the Customs Act, 1962, and it was not subsumed in GST.

Q: Is alcohol covered by GST?

Alcoholic liquor for human consumption is outside GST, as Article 366(12A) excludes it. States continue to tax it. Petroleum crude, diesel, petrol, natural gas and aviation turbine fuel come under GST only from a date the GST Council recommends.

Updated 11 October 2026 · Fact-checked

The constitutional framework gives Parliament and State legislatures the power to tax. The 101st Amendment inserted Article 246A, letting both levy GST, and Article 279A, creating the GST Council. Customs duty stays with Parliament under Entry 83 of the Union List. To solve questions, name the Article, state its rule, then conclude.

Understand Constitutional Framework of Indirect Taxes in India

India is a federal country. Under Article 265, no tax can be levied or collected except by authority of law. Each tax therefore needs a constitutional entry that says which legislature can make the law. This is the starting point of every indirect tax question.

Before GST, powers were split. The Centre taxed manufacture (excise) and, through Parliament, services. States taxed sale of goods, entry of goods and similar items. This caused tax on tax and made trade across States costly. The Constitution (101st Amendment) Act, 2016 removed the split for most goods and services. GST was rolled out on 1 July 2017.

The Amendment did four main things:

Article 246A gives Parliament and State legislatures concurrent power to make laws on GST. Parliament alone has exclusive power for GST on supplies in the course of inter-State trade or commerce.
Article 269A says GST on inter-State supplies is levied and collected by the Government of India and shared between the Union and the States. Imports are treated as inter-State supplies.
Article 279A creates the GST Council, a joint forum of the Centre and States.
Article 366(12A) defines GST as any tax on supply of goods or services or both, except alcoholic liquor for human consumption.

Certain taxes were left outside. Alcoholic liquor for human consumption is outside GST, and the States tax it. Petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel come under GST only from a date the GST Council recommends. Tobacco excise remains with the Centre under Entry 84 of the Union List. Section 174 of the CGST Act repeals the Central Excise Act, 1944 except as regards goods in Entry 84, and saves earlier proceedings, liabilities and rights.

Customs duty is not subsumed in GST. Entry 83 of the Union List gives Parliament power over duties of customs including export duties. Basic customs duty is levied under the Customs Act, 1962. On imports, IGST is charged in addition.

Key rules to remember

Article 246A: Parliament + State legislatures: GST on goods and services; Parliament alone: inter-State supplies; Concurrent power, but inter-State supply is exclusive to Parliament.
Article 269A: Inter-State GST: levied and collected by the Centre, then apportioned between Union and States; Import of goods or services is deemed to be inter-State supply.
Article 279A: composition: Chairperson = Union Finance Minister; members = Union MoS (Revenue or Finance) + one Minister (finance, taxation or other) from each State; Members choose a Vice-Chairperson from among the State Ministers.
Quorum: Quorum = one-half of total members of the Council; Needed for a valid meeting.
Voting weight: Centre = 1/3 of votes cast; all States together = 2/3; Each State's vote is of equal weight within the States' share.
Decision rule: Decision = at least 3/4 of weighted votes of members present and voting; Centre can block (1/3 > 1/4). States together cannot pass anything alone (2/3 < 3/4).
Customs power: Entry 83, Union List: duties of customs including export duties; Customs duty is outside GST and is levied under the Customs Act, 1962.

How to solve Constitutional Framework of Indirect Taxes in India questions

Use this order for any question on the constitutional basis of indirect taxes.

1Identify the tax in the question: GST, customs duty, excise on tobacco or a State levy on alcohol.
2Name the source of power: Article 246A for GST, Article 269A for inter-State GST, Entry 83 of the Union List for customs.
3State the rule in plain words, including who has power (Centre, States, or both) and any exclusive power.
4For Council questions, recall Article 279A: composition, quorum, voting weights and the three-fourths rule.
5Apply the rule to the facts, with simple arithmetic on voting if asked.
6Mention the exclusions: alcohol for human consumption, and petroleum products until the Council fixes a date.
7Close with a one-line conclusion that answers the question asked.

Quickest way: Article-to-subject map

When to use it: Use it for short notes and 'which Article' questions when time is short.

Write the four anchors: 246A (power to levy), 269A (inter-State levy and sharing), 279A (Council), 366(12A) (definition).
Add Entry 83 for customs and Entry 84 for tobacco excise.
Add the two exclusions: alcohol for human consumption and petroleum products (until the Council recommends a date).
For voting, write: Centre 1/3, States 2/3, decision at 3/4 of votes. Then derive the veto point.

Common mistakes in Constitutional Framework of Indirect Taxes in India

Saying Article 279A is the article giving power to levy GST.
Both Articles were inserted by the same Amendment and the numbers look alike.
Fix: Link 246A to 'levy' (A for authority) and 279A to 'Council'.
Stating that States have no power over inter-State GST and also none over intra-State GST.
Students remember 'exclusive power of Parliament' and apply it to all GST.
Fix: Only inter-State supply is exclusively Parliament's. Intra-State GST can be levied by both the Centre and the State.
Saying all petroleum products and alcohol are under GST.
GST is described as 'one nation one tax' without the exclusions.
Fix: Alcohol for human consumption is outside GST. Petrol, diesel, crude, natural gas and ATF come in only from a date the Council recommends.
Writing that customs duty was subsumed in GST.
Students mix up the taxes subsumed with IGST on imports.
Fix: Customs duty continues under Entry 83 and the Customs Act, 1962. IGST is charged on imports in addition.
Mixing up the voting weights, such as giving the Centre two-thirds.
The 1/3 and 2/3 fractions are easy to swap.
Fix: Remember that the Centre has a veto, so its share must be above 1/4: it is 1/3.
Saying the Central Excise Act was repealed completely by Section 174.
The repeal is remembered without its exception.
Fix: Section 174(1) repeals it except as respects goods in Entry 84 of the Union List, and Section 174(2) saves past rights, liabilities and proceedings.

Worked examples

Example 1

Explain the composition of the GST Council and its voting rules under Article 279A of the Constitution.

Show the solution

Provision: Article 279A, inserted by the 101st Amendment, provides for a GST Council.
Composition: the Union Finance Minister is Chairperson. The Union Minister of State in charge of Revenue or Finance is a member. Each State Government nominates its Minister in charge of finance or taxation, or any other Minister, as a member.
The members choose one State Minister as Vice-Chairperson.
Quorum: one-half of the total number of members.
Voting: the Centre's vote carries a weight of one-third of the total votes cast. All States together carry two-thirds.
Decision: taken by a majority of at least three-fourths of the weighted votes of members present and voting.

Answer: The Council is a joint Centre-State body chaired by the Union Finance Minister. Its quorum is one-half of its members, and its decisions need three-fourths of the weighted votes, with the Centre holding one-third and the States together two-thirds.

Example 2

In a GST Council meeting, every member is present and voting. Can the States together pass a proposal if the Centre opposes it? What minimum share of the States' combined votes does the Centre need to pass a proposal it supports?

Show the solution

Required majority = 3/4 = 75% of the weighted votes.
Centre's weight = 1/3 ≈ 33.33%. States' combined weight = 2/3 ≈ 66.67%.
If the Centre opposes, the most the proposal can get is 66.67%, which is below 75%. It fails.
If the Centre supports, it contributes 33.33%. It needs 75% − 33.33% = 41.67% more from the States.
Share of the States' votes needed = 41.67 ÷ 66.67 = 0.625, that is 62.5%.

Answer: No. The States together hold only two-thirds, which is below the required three-fourths, so the Centre effectively has a veto. For a proposal backed by the Centre, it needs 62.5% of the States' combined weighted votes.

Exam tips

Write the Article number with the rule. A bare Article number earns little; a rule without the Article loses the citation mark.
For 'Constitutional provisions on GST' questions, cover 246A, 269A, 279A and 366(12A) in that order, then the exclusions.
Keep a list of what stays outside GST: alcohol for human consumption, tobacco excise under Entry 84, and customs duty under Entry 83.
Be ready for a numerical voting question. Show the fractions, then the conclusion about the Centre's veto.
Use the CGST Act's Section 174 only for repeal and saving questions, and mention the Entry 84 exception.

Practice questions from Concept of Indirect Taxes at a Glance