The Supreme Court has held that Union and State legislatures have equal, simultaneous and unique powers to make laws on Goods and Services Tax (GST) and the recommendations of the GST Council are not binding on them.
What is the case?
- The apex court’s decision came while confirming a Gujarat High Court ruling that the Centre cannot levy Integrated Goods and Services Tax (IGST) on ocean freight from Indian importers.
The Judgment
- The recommendations of the GST Council are the product of a collaborative dialogue involving the Union and the States.
- They are recommendatory in nature. They only have a persuasive value.
- To regard them as binding would disrupt fiscal federalism when both the Union and the States are conferred equal power to legislate on GST.
- The court emphasised that Article 246A of the Constitution gives the States power to make laws with respect to GST.
- It treats the Union and the States as “equal units”.
- It confers a simultaneous power (on Union and States) for enacting laws on GST.
- Article 279A, in constituting the GST Council, envisions that neither the Centre nor the States are actually dependent on the other.
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246A: Special Provision for GST
This Article was newly inserted to give power to the Parliament and the respective State/Union Legislatures to make laws on GST respectively imposed by each of them.
However, the Parliament of India is given the exclusive power to make laws with respect to inter-state supplies. The IGST Act deals with inter-state supplies.
Thus, the power to make laws under the IGST Act will rest exclusively with the Parliament. |
Article 279A: GST Council
This Article gives power to the President to constitute a joint forum of the Centre and States called the GST Council.
The GST Council is an apex member committee to modify, reconcile or to procure any law or regulation based on the context of GST in India. |
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