Page 25 - CA Final GST

Badlani Classes

Chapter : 5

Important to Know

Important to Know 1 : Union Territories and its importance in GST :
What are Union India is a country located in southern Asia. With over 1.2 billion people, India
Territories is the most populous democracy in the world. It is a federal constitutional
republic governed under a parliamentary system consisting of 29 states and 7
union territories. All states, as well as the union territories of Puducherry and
[1]
the National Capital Territory of Delhi, have elected legislatures and
governments, both patterned on the Westminster model. The remaining five
union territories are directly ruled by the centre through appointed
administrators.

Why UTGST ? The GST Council has set to approve both State-GST (SGST) and Union
Territories-GST (UTGST) laws.
“State” with reference to Articles 246A, 268, 269, 269A, and 279A includes a
Union territory with Legislature. Even ‘State’ for the purposes of GST, includes
a Union territory with Legislature.

Therefore, technically SGST cannot be levied in a Union Territory without
legislature. This applies to the following Union Territories of India:

1. Chandigarh
2. Lakshadweep

3. Daman and Diu
4. Dadra and Nagar Haveli

5. Andaman and Nicobar Islands
To plug this loophole, GST Council has decided to have Union Territory GST
Law (UTGST) – which would be at par with SGST. However, SGST can be
applied in Union Territories such as New Delhi and Puducherry, since both have
their individual legislatures, and can be considered as “States” as per GST
process.
There would be the following combination of taxes applicable for any
transaction:
1. For Supply of goods and/or services within a state (Intra-State): CGST +
SGST;
2. For Supply of goods and/or services within Union Territories (Intra-UT):
CGST + UTGST;

3. For Supply of goods and/or services across States and/or Union Territories
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(Inter-State/ Inter-UT): IGST

Central Goods & Services Tax Act, 2017