Article 269A of CoI : Article 269A: Levy and collection of goods and services tax in course of inter-State trade or commerce.

Explanation using Example

Example 1:

Scenario: A company in Maharashtra sells machinery to a company in Karnataka.

Explanation: Since the sale involves two different states, it qualifies as inter-State trade. According to Article 269A, the Goods and Services Tax (GST) on this transaction will be levied and collected by the Government of India. The collected tax will then be distributed between the Union and the States based on the recommendations of the GST Council.

Practical Outcome: The Maharashtra company will charge Integrated GST (IGST) on the machinery sold to the Karnataka company. The IGST collected will be apportioned between the Central Government and the State Governments as per the law.

Example 2:

Scenario: An individual in Delhi purchases a software service from a company based in the United States.

Explanation: The import of services into India is considered as inter-State trade under Article 269A. Therefore, the GST on this service will be levied and collected by the Government of India.

Practical Outcome: The individual in Delhi will be required to pay IGST on the imported software service. The collected IGST will be distributed between the Union and the States according to the recommendations of the GST Council.

Example 3:

Scenario: A business in Tamil Nadu supplies goods to a customer in Kerala and uses the tax credit from the IGST paid on the purchase of raw materials from Gujarat.

Explanation: The GST collected on the sale from Tamil Nadu to Kerala is considered inter-State trade. The business in Tamil Nadu can use the IGST credit from the raw materials purchased from Gujarat to pay the IGST on the sale to Kerala.

Practical Outcome: The IGST collected on the sale to Kerala will be apportioned between the Union and the States. The tax credit used from the purchase in Gujarat will not form part of the Consolidated Fund of India, ensuring proper allocation of tax revenues.

Example 4:

Scenario: A retailer in West Bengal sells goods to a customer in Assam and uses the tax credit from the SGST paid on local purchases within West Bengal.

Explanation: The sale from West Bengal to Assam is inter-State trade, and the GST will be levied and collected by the Government of India. The retailer can use the SGST credit from local purchases to pay the IGST on the inter-State sale.

Practical Outcome: The IGST collected on the sale to Assam will be distributed between the Union and the States. The SGST credit used will not form part of the Consolidated Fund of West Bengal, ensuring accurate distribution of tax revenues.

Example 5:

Scenario: Parliament enacts a law determining that the place of supply for online educational services is the location of the recipient.

Explanation: According to Article 269A(5), Parliament has the authority to formulate principles for determining the place of supply for goods and services. In this case, the place of supply for online educational services is determined to be the location of the recipient.

Practical Outcome: If an online educational service provider based in Mumbai supplies services to a student in Chennai, the place of supply is Chennai. Therefore, the transaction is considered inter-State trade, and IGST will be levied and collected by the Government of India.