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7 Promotes social welfare High taxes are imposed on consumption of harmful products/sin

goods such as alcoholic products, tobacco products, etc. This not
only checks their consumption but also enables the State to collect
substantial revenue.
8 Regressive in nature The rich & poor have to pay the same rate of indirect taxes. This
further increases the income disparities between the rich and the poor.

CCP 01.01.03.00
Discuss the deficiencies in the existing indirect taxes which led to the need for ushering into GST

regime.
Answer : Deficiencies in the erstwhile indirect tax regime:-
Feature Explanation
Earlier some items were treated both as goods & Services that led to
1 Double taxation
double taxation.

2 No set-off CENVAT & State level VAT were value added taxes but cross credit i.e.
set-off of those was not possible as CENVAT was central levy & the
other one was a State levy.

3 Cascading of taxes CENVAT did not include value addition chain in distributive trade after
the stage of production & in state level VAT also, CENVAT load on goods
was not removed leading to cascading of taxes.
4 Several taxes not For a single transaction, multiple taxes in multiple forms were required
subsumed in VAT to be paid like Luxury Tax, Entertainment Tax, etc. which were not
subsumed in VAT.

5 Non-integration of VAT & VAT on goods was not integrated with service tax at the state level.
Service Tax So, the cascading effect of service tax was not removed.

6 Cascading nature of CST CST was non-vatable (i.e. no credit was allowed) and an origin-based
tax which had cascading effect.
7 High Compliance Cost Large number of taxes created high compliance cost for the taxpayers
in form of more returns, payments, etc.

02.Various Articles of The Constitution of India

CCP 01.02.04.00
Write a short note on various Lists provided under Seventh Schedule to the Constitution of India.
[CA Inter MTP-Oct 21]
Answer:
Seventh Schedule to Article 246 of the Constitution contains three lists which enumerate the matters under

which the Union & the State Governments have the authority to make laws as follows:-
List-I (UNION It contains the matters in respect of which the Parliament (Central Government) has
LIST):- the exclusive right to make laws.

List-II (STATE It contains the matters in respect of which the State Government has the exclusive
LIST):- right to make laws.
List-III (CON- It contains the matters in respect of which both the Central & State Governments

CURRENT LIST):- have power to make laws.

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