Q.Explain briefly why GST is described as a 'destination-based' tax, as distinguished from the 'origin-based' character of some pre-GST taxes such as Central Sales Tax (CST).

The destination-vs-origin distinction is about which State's government actually keeps the tax revenue.

A tax is origin-based when the taxing State's entitlement to the revenue depends on where the goods/services were PRODUCED or SOLD FROM. Central Sales Tax (CST), levied on inter-State sale of goods before GST, worked this way — the SELLING State kept the CST revenue, even if the goods were consumed entirely in a different State. This structurally favoured States with strong manufacturing/production bases over States that were mainly consumers of goods produced elsewhere.

GST reverses this logic: it is destination-based, meaning the tax revenue on any supply ultimately belongs to the State where the goods/services are actually CONSUMED, regardless of where they were produced. This is achieved through the IGST mechanism for inter-State supplies (Section 7.iii) — IGST is collected by the Centre and then apportioned to the destination State, not the origin State. This design was a deliberate objective of the GST reform: to stop the tax system from structurally favouring only producing States, and instead let …

Students sometimes describe 'destination-based' simply as 'the buyer pays the tax' — every indirect tax is ultimately paid by the buyer/consumer; the distinguishing feature of destination-based taxation is specifically about …