In spite of the optimism shown by Asim Dasgupta, chairman of the empowered committee of state finance ministers, the much-anticipated goods and services tax (GST) is unlikely to be introduced on April 1, 2010. The process of Constitutional amendment to bring the new indirect tax legislation may take another five months.

It will take 5-6 months for the amendment and everything else to fall in place. Besides, we cannot start work on things like IT infrastructure as long as a final GST structure is not there, a highly-placed government official said.

The finance ministry is working on the Bill for Constitutional amendment, which is the first step in the process. The Bill is not ready to be tabled in the ongoing session of Parliament, which ends on December 21.

Even if the government tables the Bill in the Budget session in February, after the Cabinet approval, the exercise will not be over by the rollout deadline. It will first have to be examined by the select committee of Parliament and, if approved, it will require the approval of state legislatures.

The law ministry has conveyed to the finance ministry that the amendment would need to make 10-15 changes in various Articles.

The law ministry is trying to ensure that the amendment does not make changes in the basic structure of the Constitution which can be challenged in the court.

The Constitution provides for delineation of power to tax between the Centre and states. While the Centre is empowered to tax services and goods up to the production stage, states have the power to tax the sale of goods. States do not have the power to levy a tax on the supply of services, while the Centre does not have the power to levy tax on the sale of goods.

It is essential to have Constitutional amendments for empowering the Centre to levy tax on sale of goods and states for levy of service tax and tax on imports and other related issues.

As part of the exercise on Constitutional amendment, special attention would be given to the formulation of a mechanism to uphold the need for a harmonious structure for GST, along with the concern for power of the Centre and States in a federal structure, the empowered group said in its discussion paper released last month.

A joint working group was constituted on September 30, comprising officials of the Central and state governments, to prepare the draft legislation for the Constitutional amendment.