CDS (II) 2023 General Knowledge · Question 33 of 120

Correct — D, Taxes on Petroleum and Petroleum Products. The Constitution (One Hundred and First Amendment) Act, 2016 folded the old indirect taxes into GST by rewriting the Seventh Schedule. Central Excise Duty went that way: Union List entry 84 was substituted, and the Union's power to levy excise now survives only on five petroleum products and on tobacco. Service Tax went the same way: entries 92 and 92C of the Union List, which carried taxes on newspapers, advertisements and services, were omitted outright. So options (b) and (c) name taxes that GST did subsume. Petroleum is the deliberate exception. Article 366(12A) defines GST as a tax on the supply of goods or services except alcoholic liquor for human consumption, so the five petroleum products — petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel — are inside the definition of GST, but Article 279A(5) leaves it to the GST Council to recommend the date from which GST will actually be levied on them. Until the Council names that date, they continue to bear Union excise under the substituted entry 84 and State sales tax or VAT under the substituted State List entry 54. In practice, and in the sense the question intends, they stand outside GST. As of the 2023 exam the Council had recommended no such date, and that remains the position today.

• (a)Customs Duties — The strongest objection to the key rather than an easy wrong answer, and it deserves a straight statement: basic customs duty was not subsumed either. Union List entry 83, 'Duties of customs including export duties', was left untouched by the 101st Amendment. What GST absorbed on the import side were the two additional levies that stood in for domestic taxes — countervailing duty and special additional duty — which is why imports now attract integrated GST alongside basic customs duty. Read strictly, this option is also a tax outside GST, and the key marks the petroleum option instead.
• (b)Central Excise Duties — Subsumed. Union List entry 84 was substituted by the 101st Amendment, leaving Union excise alive only on the five petroleum products and on tobacco; general central excise was replaced by central GST.
• (c)Service Tax — Subsumed, and comprehensively so. The 101st Amendment omitted Union List entries 92 and 92C, extinguishing the separate power to tax services; services are now taxed under GST on the same footing as goods.

GST replaced a stack of Union and State indirect taxes with one levy shared between the two governments, and it was constructed by constitutional surgery rather than by ordinary legislation. Article 246A gave both Parliament and State legislatures concurrent power to tax the supply of goods and services; Article 269A dealt with inter-State supplies; Article 279A created the GST Council; and Article 366(12A) supplied the definition. The Seventh Schedule was then rewritten so that the old taxing entries either disappeared or shrank to what GST does not cover.

The intended reasoning is that Central Excise and Service Tax are the two headline levies GST swallowed, so the answer must lie between customs and petroleum, and that petroleum is the famous carve-out every commentary mentions. That much is sound. It is worth recording honestly, however, that the option naming customs duties is defensible on the constitutional text: entry 83 was never amended, so basic customs duty sits outside GST too, and only the additional customs levies were absorbed. The distinction that saves the key is one of category rather than of fact. Petroleum is a carve-out from within the GST architecture itself — the products are inside the definition of GST and are simply awaiting a date from the Council, so the exclusion is temporary and internal. Customs duty is a border levy on the act of importing, a different kind of tax that was never a candidate for subsumption at all; it continues alongside GST rather than instead of it. Author to the key, but do not carry away the idea that customs duty is part of GST — it is not.

• Article 366(12A) defines GST as a tax on the supply of goods or services 'except taxes on the supply of the alcoholic liquor for human consumption'.
• Article 279A(5) leaves the GST Council to recommend the date on which GST is to be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.
• Union List entry 84 was substituted by the 101st Amendment so that Union excise survives only on those five petroleum products and on tobacco; State List entry 54 similarly preserves State tax on the five plus alcoholic liquor.
• Union List entries 92 and 92C, covering taxes on advertisements and on services, were omitted by the 101st Amendment — which is how Service Tax was subsumed.
• Union List entry 83, 'Duties of customs including export duties', carries no amendment from the 101st Amendment; basic customs duty continues, while countervailing duty and special additional duty were absorbed into integrated GST.

• Concluding from this item that customs duty is part of GST. It is not; basic customs duty survives, and only the additional customs levies were absorbed.
• Confusing the alcohol carve-out with the petroleum one. Alcoholic liquor is excluded from the definition of GST itself; petroleum is inside the definition but awaits a Council-notified date.
• Assuming tobacco escaped GST. Tobacco attracts GST and central excise both, which is why entry 84 still names it.

As an odd-one-out from a list of indirect taxes, or as a statements item on which levies the 101st Amendment subsumed and which survived.

• practice — not a real PYQ

  Under the Constitution of India, which one of the following is excluded from the very definition of goods and services tax?

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

  Answer(b) Alcoholic liquor for human consumption — Article 366(12A) excludes it from the definition itself; the petroleum products are inside the definition but await a date set by the GST Council, and tobacco is taxed under GST as well as central excise.

• practice — not a real PYQ

  The date from which goods and services tax is to be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel is to be recommended by which one of the following?

  • (a)The Finance Commission
  • (b)The GST Council
  • (c)The Union Cabinet
  • (d)The Central Board of Indirect Taxes and Customs

  Answer(b) The GST Council — Article 279A(5) places that recommendation with the Council, which is why the five products remain outside GST in practice until it acts.