CDS (I) 2022 General Knowledge · Question 45 of 120

Correct — D, Petrol. Petrol is one of five petroleum products that the Constitution itself keeps outside the levy of GST for the time being. Article 279A(5) provides that the Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel. Until the Council names that date, these five continue to bear Union excise duty and State sales tax or VAT, which is why the price of petrol still varies from State to State. The other three items in the question are ordinary GST goods. Cosmetics and jewellery are taxed at their notified rates — gold, silver and platinum at 3 per cent — and medical grade oxygen is likewise a supply of goods within the GST net.

• (a)Cosmetics — Cosmetics are squarely inside GST and sit in the higher rate slabs, as discretionary consumer goods usually do. Nothing in the Constitution or the GST Acts carves them out.
• (b)Medical grade oxygen — Medical grade oxygen is a taxable supply of goods under GST. Its rate has been adjusted by the Council from time to time, most visibly during the COVID-19 waves, but a change of rate is the opposite of being outside the tax.
• (c)Jewellery — Jewellery is inside GST — gold, silver and platinum are taxed at 3 per cent, one of the special rates the Council fixed for precious metals. A low rate is not the same thing as exclusion.

The Constitution (One Hundred and First Amendment) Act, 2016 created GST as a single tax on the supply of goods and services. Article 366(12A) defines it as any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption — so alcohol is excluded from the very definition. The five petroleum products are treated differently: they fall inside the definition, but Article 279A(5) leaves the date of levy to the GST Council, and no date has ever been notified. Union List entry 84 and State List entry 54, as substituted, preserve the Centre's excise and the States' sales tax on exactly those products in the meantime.

The distinction the question rewards is between a low rate and no GST at all. Three options are taxed goods; one is constitutionally deferred. It helps to know why the deferral survives: petroleum taxes are among the largest single revenue heads for both the Centre and the States, and bringing them under GST would move that revenue into a shared pool with input credit flowing through it. That is a fiscal decision, not a legal obstacle, and the Council can end it whenever it agrees to. Two related carve-outs are worth keeping separate. Alcoholic liquor for human consumption is excluded by the definition itself and would need a constitutional amendment to bring in; the five petroleum products need only a Council recommendation. And basic customs duty was never a candidate for subsumption at all, since it is a levy on import rather than on domestic supply.

• Article 279A(5) leaves the GST Council to recommend the date from which GST will be levied on petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel.
• No such date has been notified, so these five still bear Union excise duty and State sales tax or VAT.
• Article 366(12A) excludes alcoholic liquor for human consumption from the definition of GST itself — a different and stronger kind of carve-out.
• Union List entry 84 and State List entry 54, as substituted by the 101st Amendment, preserve excise and State sales tax on those products.
• Gold, silver and platinum are taxed under GST at 3 per cent, one of the special rates for precious metals.

• Treating a nil or low rate as being outside GST — exemption, zero rating and exclusion are three different things.
• Assuming petroleum is excluded by the definition; it is inside the definition with the date of levy deferred.
• Writing that customs duty was subsumed — only the additional duties of customs went into GST, and basic customs duty continues on every import.

As a which-is-not-covered item, as a statements question on the constitutional provisions, or through the composition and voting rules of the GST Council.

• practice — not a real PYQ

  Which one of the following is excluded from the definition of goods and services tax by Article 366(12A) itself?

  • (a)Petrol
  • (b)Natural gas
  • (c)Alcoholic liquor for human consumption
  • (d)Aviation turbine fuel

  Answer(c) Alcoholic liquor for human consumption — the other three are inside the definition, with the date of levy left to the GST Council under Article 279A(5).

• practice — not a real PYQ

  The Chairperson of the Goods and Services Tax Council is

  • (a)the Prime Minister of India
  • (b)the Union Finance Minister
  • (c)the Union Home Minister
  • (d)a State Finance Minister chosen by rotation

  Answer(b) The Union Finance Minister — a State minister is chosen as Vice-Chairperson by the State members among themselves.