GST Officials: SC Order Won’t Impact Council Structure

GST officials said that the authority and structure of the Goods and Services Tax (GST) Council would not change despite the Supreme Court’s recent ruling. However, the Council may take note of the court’s observations in its next meeting. The GST officials stated below on anonymity:

• Recently, the Apex court ruled that the recommendations of the GST Council were not binding on either the Centre or the states. Also, the top court mentioned that there’s no need to amend GST laws.

• In the ocean freight case, the Supreme Court has observed that the GST Council recommendation has persuasive value for primary legislation. They are binding as a subordinate to legislation, such as issuing notifications, framing rules, prescribing rates and taxes, etc.

• Article 279A of the Constitution states that the GST Council shall recommend the Centre and the states on several matters. Also, the same article says that the Council shall be guided by the need for a harmonised GST structure to develop a harmonised national market. During the past five years, all Council decisions were unanimous, expert the tax rate on the lottery. However, the dissenting states accepted this recommendation, too, in the spirit of cooperative federalism.

• Article 279A empowers the Council to recommend matters related to GST laws, principles of GST levy, GST rates, place of supply rules, and special provisions for specific states. After deliberation in the Council, these recommendations arrived at every time in which all states participated. After that, the Centre and states implemented recommendations under their respective Acts.

• The Supreme Court has only elaborated on the GST mechanism while making its observations. This judgment does not lay down anything new in so far as the GST mechanism is concerned. It also does not have any bearing on GST functioning in India nor lays down fundamentally different to the existing GST framework.

The experts say that the Supreme Court has reiterated the legal position of the GST Council, and it has acted smoothly on the same legal principle since 1st July 2017. Also, the GST Council will continue to function without any issue until it makes decisions in the right spirit of cooperative federalism and considers the opinions of all states before reaching any conclusion.

For any clarifications/feedback on the topic, please contact the writer at dvsr.anjaneyulu@cleartax.in