{"id":186425,"date":"2022-05-25T20:37:49","date_gmt":"2022-05-25T15:07:49","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=186425"},"modified":"2022-05-25T20:39:06","modified_gmt":"2022-05-25T15:09:06","slug":"a-new-road-for-indias-fiscal-federalism","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/a-new-road-for-indias-fiscal-federalism\/","title":{"rendered":"A new road for India\u2019s fiscal federalism"},"content":{"rendered":"\n

News<\/strong>: Recently, the Supreme Court of India delivered its verdict in the Union of India vs Mohit Minerals<\/em><\/strong> case, where it also made several observations on the GST Council recommendations<\/p>\n

About GST Regime<\/strong><\/h5>\n

The GST regime was introduced through the 101st constitutional Amendment in July 2017 which aimed for unification of tax administration in India – \u2018One Nation, One Tax\u2019<\/strong>.<\/p>\n

GST Council: <\/strong>The Amendment Act introduced Article 279A<\/strong> which mandated creation of a GST Council.<\/p>\n

GST Council Composition: <\/strong>This body comprises the Union Finance Minister<\/strong>, the Union Minister of State for Finance<\/strong>, and Ministers of Finance<\/strong> from every State government.<\/p>\n

Functions: <\/strong>The act led to deletion and amendment of many entries in the State list of Schedule VII of the Constitution. It enabled the state government to legislate on GST through a newly introduced Article 246A.<\/strong> The State governments could not legislate on sale or purchase of goods (barring a few exceptions, such as petroleum and liquor).<\/p>\n

The Council was empowered to make recommendations<\/strong> to the Union and States on various matter. The matters included goods and services that may be subjected<\/strong> to or exempted<\/strong> from GST and the<\/strong> rates<\/strong> at which tax is to be levied.<\/p>\n

Voting share: <\/strong>The Union government was granted a virtual veto in the GST Council\u2019s voting structure and system<\/p>\n

Confusions between advisory and binding nature of GST Council\u2019s recommendations<\/strong><\/h5>\n

The use of the word \u201crecommendations<\/strong>\u201d suggested that the GST decisions would be advisory, at best.<\/p>\n

The mandate of establishment of a mechanism under Article 279A <\/strong>to adjudicate disputes between governments on decisions taken by the Council suggested that advice rendered were binding in nature.<\/p>\n

Impact of making recommendations binding in nature<\/strong><\/p>\n

It could lead to dissolution and destruction of the well-laid plans of the Constituent Assembly, which carefully divided Fiscal responsibilities <\/strong>between the Union and the States.<\/p>\n\n\n\n
Must read<\/strong>: Let’s keep GST good and simple<\/span><\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What are the Supreme Court\u2019s observations in the <\/strong>Union of India vs Mohit Minerals<\/em><\/strong>?<\/strong><\/h5>\n

The Court proceeded on a technical reading of the provisions of the Central Goods and Services Tax Act. <\/strong><\/p>\n

The Article 246A provides concomitant<\/strong> power<\/strong> both to the Union and to the State governments to legislate on GST. It does not discriminate between the two in terms of its allocation of authority.<\/p>\n

The concomitant powers<\/strong> allocated in Article 246A<\/strong> cannot be limited by Article 279A, which establishes a GST Council, and which treats the Council\u2019s decisions as \u201crecommendations\u201d.<\/p>\n

Both Parliament and the State legislatures enjoy equal power to legislate on Goods and Services Tax (GST)<\/strong>. The Goods and Services Tax Council\u2019s<\/strong> recommendations are just advisory that could never be binding on a legislative body.<\/p>\n

According to the Court, the State legislatures<\/strong> can deviate from any advice rendered by the GST Council and to make their own laws by asserting, in the process, their role as equal partners in India\u2019s federal architecture<\/strong>.<\/p>\n

If the GST Council was intended to be a decision-making authority having binding recommendation. Such a qualification would have been included in Articles 246A or 279A.<\/p>\n

Way Forward<\/strong><\/h5>\n

The legislatures can give binding effect to the Council\u2019s recommendation <\/strong>through statutory law. But, according the SC, a constitutional pow<\/strong>er can never be limited through statute.<\/p>\n

Indian federalism is a dialogue between cooperative<\/strong> and uncooperative federalism.<\/strong> The federal units are at liberty to use different means <\/strong>of persuasion<\/strong> ranging from collaboration<\/strong> to contestation<\/strong>.<\/p>\n

GST was conceived as a product of what some described as \u201cpooled sovereignty<\/strong>\u201d where our nation can take a genuine turn towards a more \u201ccooperative federalism\u201d<\/strong>.<\/p>\n

Source<\/strong>: The post is based on an article \u201cA new road for India\u2019s fiscal federalism<\/strong>\u201d published in the \u201cThe Hindu<\/strong>\u201d on 25th<\/sup> May 2022<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: Recently, the Supreme Court of India delivered its verdict in the Union of India vs Mohit Minerals case, where it also made several observations on the GST Council recommendations About GST Regime The GST regime was introduced through the 101st constitutional Amendment in July 2017 which aimed for unification of tax administration in India… Continue reading A new road for India\u2019s fiscal federalism<\/span><\/a><\/p>\n","protected":false},"author":10328,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[212,10498],"class_list":["post-186425","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186425","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10328"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=186425"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186425\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=186425"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=186425"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=186425"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}