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Browse Law School Education Taxation GST & Constitutional Changes

It is correct to say that GST is a subsummation. It is subsummation of a lot of existing taxes, but what exactly is meant by subsummation. For this purpose we need to travel back in time. 

It was in November 2009, that for the first time this word was used, which was used by the State Empowered Committee. The idea was to pick out a large number of indirect taxes which are imposed on goods and services and to bring them together to form one harmonised tax. 

Now this expression harmonised and also the expression subsumed, if used in both the 2011 and 2014 Amendment Bill which were brought for the purpose of GST. In fact these two expressions are also used in the Constitution Amendment Act which has been brought to assure GST in India, so what exactly is meant by subsummation. 

This can be understood in contrast to the expression harmonised. Prior to the amendment of Constitution, there were a number of taxing subjects which were there in Schedule VII. These taxing subjects related to different kinds of transactions, different kinds of supplies. All of these are intended to be brought under one common umbrella, to be imposed as one single tax, namely GST. Unfortunately, because of political realities there has not been a complete subsummation but a partial subsummation. But even that partial subsummation is a strong one. 

A number of taxes have been brought within the fold of GST. For example, the States can no longer impose entry taxes, States can no longer impose advertisement taxes, luxury taxes, and a wide variety of other taxes. 

Similarly the Parliament cannot exclusively impose tax on services. It has been empowered to collect excise duty but upon a very limited number of goods. Whatever powers have been denuded from the Parliament or from the ambit of State Legislature have been brought together into GST. 

This actually is meant as a subsummation exercise, wherein GST is actually one big umbrella under which lot of other taxes have been brought in.