Dual GST Model; CGST & SGST; Salient Features — Law of Taxation Notes

Dual GST Model; CGST & SGST; Salient Features

Buy a phone within Karnataka and your bill shows two GST lines — CGST and SGST — splitting one tax between the Centre and the State. Buy the same phone from Maharashtra and the bill shows one line — IGST. That two-versus-one split on the invoice is the dual model in a nutshell, and it is the most-asked idea in the whole GST syllabus.

The dual model explained

India is a federation, so both the Centre and the States needed a share of GST. The solution is a dual (concurrent) model: on a single supply, tax is levied simultaneously by the Centre and the State, but which components apply depends on whether the supply is intra-State or inter-State:

Intra-State supply (within one State): the Centre levies CGST and the State levies SGST on the same transaction, each on the same value, at half the total rate. (In a Union Territory without a legislature, UTGST replaces SGST — Unit IV.)
Inter-State supply (across States, or import): the Centre levies a single IGST (roughly = CGST + SGST), which it later apportions with the destination State.

The three taxes, defined:

CGST (Central Goods and Services Tax Act, 2017) — the Centre’s tax on intra-State supply.
SGST (State GST Act of each State) — the State’s tax on intra-State supply.
IGST (Integrated GST Act, 2017) — the Centre’s tax on inter-State supply and imports.

Salient features of GST (combine with Topic 1):

One tax on supply of goods and services, subsuming most indirect taxes.
Dual structure — CGST + SGST intra-State; IGST inter-State.
Destination-based — revenue to the consuming State.
Seamless input tax credit across the chain (with CGST/SGST/IGST cross-utilisation rules).
Common GSTN portal for registration, returns and payment.
Rate slabs fixed by the GST Council; four main rates plus special rates.
Threshold exemption and a composition scheme for small dealers.

⚠️ DON’T CONFUSE — CGST/SGST vs IGST

The test is intra-State or inter-State? Within one State → the supply is split into CGST (Centre) + SGST (State) — two taxes on one bill. Across States, or an import → a single IGST (Centre) — one tax, later shared with the destination State. Rule of thumb: same-State = CGST+SGST; different-State = IGST. IGST ≈ CGST + SGST in rate; it is not an extra tax, just the inter-State form.

🧩 WORKED EXAMPLE — Same-State vs different-State sale

Facts. A dealer in Bengaluru sells goods worth ₹1,00,000 at 18% GST — (a) to a buyer in Mysuru (same State); (b) to a buyer in Chennai (different State).

Rule. Intra-State supply attracts CGST + SGST (9% + 9%); inter-State supply attracts IGST (18%).

Apply.

(a) Mysuru: CGST ₹9,000 + SGST ₹9,000 = ₹18,000 (Centre and Karnataka each get ₹9,000).

(b) Chennai: IGST ₹18,000 (collected by the Centre, later apportioned to Tamil Nadu, the destination State).

Conclusion. The rate is the same (18%), but intra-State splits into two taxes while inter-State is one IGST — the dual model at work.

In Simple Terms: GST is shared between the Centre and the States. Sell within your State and you charge two taxes — CGST (Centre) + SGST (State). Sell across States (or import) and you charge one — IGST (Centre), later shared with the destination State. Same rate either way; only the split changes.

flowchart TD
    ROOT["A supply — intra or inter-State?"]:::root
    ROOT --> INTRA["INTRA-STATE (within a State)"]:::leaf
    INTRA --> C1["CGST (Centre) + SGST (State)"]:::sub
    ROOT --> INTER["INTER-STATE (across States / import)"]:::leaf
    INTER --> I1["IGST (Centre) — apportioned to destination State"]:::sub
    classDef root fill:#FFF8DC,stroke:#000,stroke-width:1px,color:#000;
    classDef leaf fill:#E6F3FF,stroke:#1E3A8A,color:#000;
    classDef sub fill:#F2F2F2,stroke:#555,color:#000;
    linkStyle default stroke:#888,stroke-width:1px;

Case Laws

Union of India v Mohit Minerals (P) Ltd. (2022) — affirmed the dual, cooperative-federalism structure of GST.

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