Solution

GST (Goods and Services Tax) is a consumption tax based on the "destination" principle. In the context of GST, "destination" means that the tax is levied and collected at the final point of consumption, i.e., where the goods or services are ultimately consumed by the end consumer. The tax is collected by the state or union territory where the consumption takes place. Under the destination-based GST system, the tax is applied and collected throughout the supply chain, but the liability to pay the tax rests on the entity that supplies the goods or services to the final consumer. This ensures that the tax burden is borne by the end consumer rather than being shifted along the supply chain. The destination-based principle is an essential aspect of GST, as it prevents cascading of taxes (tax-on-tax) and promotes a more efficient tax structure by ensuring that taxes are levied only once, at the point of final consumption. It also helps in the equitable distribution of tax revenues among the states based on their consumption patterns.