GST Council recommendations not binding on government: SC

What is the News?

The Supreme Court has ruled that the recommendations of the GST council are not binding on the Union and the State Governments.

What are the key highlights from the Supreme Court judgment on GST?

Firstly, the recommendations of the GST Council are the product of a collaborative dialogue involving the Union and States. They are recommendatory in nature. To regard them as binding would disrupt fiscal federalism where both the Union and the States are conferred equal power to legislate on GST.

Secondly, if the GST Council was intended to be a decision-making authority ​​whose recommendations are binding, such a qualification would have been included in Articles 246A or 279A.

Instead, Article 246A (which gives the States power to make laws with respect to GST) of the Constitution treats the Union and the States as “equal units”.

Moreover, Article 279A in constituting the GST Council, envisions that neither the Centre nor the states are actually dependent on the other. It confers a simultaneous power (on Union and States) for enacting laws on GST.

What was the Center and States’ response to this verdict?

Center: It has said that the court has not said anything new. This is because the GST law says that it will recommend, but it has nowhere said that it will mandate. 

States: Supreme Court judgment clarifies all confusion regarding the GST Council recommendations. It is a verdict that upholds the federal rights of States and the people. 

Source: The post is based on the article “GST Council recommendations not binding on government: SC” published in TOI on 20th May 2022.