In the Budget 2007-08, the finance minister has declared that the roadmap to goods and services tax will be decided by states. However, for clear thinking, it is important to know the right reasons for having GST as this will determine the nature of the GST to come.

Some analysts argue that the overlapping nature of goods and services is a good reason to introduce GST. This treatise seeks to emphasise that there is no lack of clarity in the concepts of goods and services.

Those who argue that goods and services are overlapping concepts are of the opinion that goods and services don't have any clear definitions. This is not correct. The fact is that 'excisable goods' have been clearly defined in the Central Excise Act in Section 2(d) as the items, which are subject to duty of excise as specified in the Central Excise Tariff Act, 1985.

Service has not been defined but 'taxable service' has been. It may be true that there are some cases where goods and services are served together. There have been a few cases, which have gone to a tribunal but the concept of goods and services is not unclear at all.

The examples, such as intellectual property rights, goods under financial lease, which analysts sometimes provide are not good examples of such unclear concepts. The issue will be clear if one carefully follows the enunciation of the concept of taxable events given by the Supreme Court in a legendary judgement delivered in May 1963.

The Supreme Court clarified that: "...Taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof. We may in this connection contrast sales tax, which is also imposed with reference to goods sold where the taxable event is the act of sale.  Therefore, though both excise duty and sales tax are levied with reference to goods, the two are very different imposts.  In one case the imposition is on the act of manufacture or production while in the other it is on the act of sale.  In neither case, therefore, can it be said that the excise duty or sale tax is a tax directly on the goods for in that event they will really become the same tax."

The service tax, which has been introduced much later, also has its taxable event-- the act of providing service. The same theory that the different indirect taxes are not on the goods but on the taxable events has been subsequently reiterated in many Supreme Court judgements.

Even in countries where there is GST, there are umpteen court cases on conceptual matters. Some of the judgements given by the European Court of Justice show how complicated the issues are.

They relate to the concepts of research and analysis, place of supply, distinction between card games in casinos and outside, stops made by a ship in ports of non-member countries at which passengers may disembark for a short (how short is short) period, etc.