GST: Clarification likely on Centre's power to levy excise

The revenue department is likely to issue clarification on legality of levying excise duty by the Centre on various commodities till implementation of goods and services tax (GST) from April 1, 2017.

The clarification is expected to address the doubt being raised by certain experts about the legality of levying excise duty during the interim period before the GST rollout.

The other view is that the Centre has widespread power under Entry 97 of the Union List to levy taxes on any products.

The confusion arose following the notification of certain clauses in the GST Constitutional Amendment with effect from September 16.

As per the notification, Entry 84 of the Union List has been amended to include only petroleum crude, high-speed diesel, petrol and natural gas. It would mean that the Centre can levy excise duty only on these products.

Earlier, Entry 84 of the Union List of the Constitution allowed the Centre to levy excise duty on tobacco and other goods with the exception of potable alcohol, opium and narcotic drugs.

In view of these amendments, it is being speculated on whether the government can legally collect excise duty till the day GST, which will subsume excise duty in addition to service tax and other levies, is implemented.

Experts, however, are of the opinion that Entry 97 of the Union List gives widespread power to the Centre to levy taxes on goods which are not mentioned in any List under the Seventh Schedule of the Constitution.

Entry 97 says that the Centre will have powers on "any other matter not enumerated in List II or List III, including any tax not mentioned in either of those lists".

List II under the Seventh Schedule of the Constitution deals in subjects on which states have legislative powers while List III is the concurrent list wherein both the Centre and states can make laws.

Nangia & Co Director Rajat Mohan said, "The government may say the power to levy excise, service tax could be drawn from Entry no 97 from the Union List which is residuary entry. The power to levy state taxes that is value added tax (VAT), entry tax and Octroi, etc. Could be drawn from Section 19 of The Constitutional (One Hundred and First Amendment) Act, 2016.