{"id":186933,"date":"2022-05-28T22:01:35","date_gmt":"2022-05-28T16:31:35","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=186933"},"modified":"2022-05-28T22:01:35","modified_gmt":"2022-05-28T16:31:35","slug":"storm-in-a-gst-cup","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/storm-in-a-gst-cup\/","title":{"rendered":"Storm in a GST cup"},"content":{"rendered":"\n

News<\/strong>: The Supreme Court has given a ruling on a commercial dispute,\u00a0the Union of India versus Mohit Minerals<\/strong>, over the levy of the integrated goods and services tax\u00a0(GST) on ocean freight charges paid by importers. It has triggered a nationwide debate.<\/p>\n

About the Judgment<\/strong><\/h5>\n

The judgment is virtually a recitation from the Article 279A (4)<\/strong> of the Constitution of India. The article states that the GST Council shall\u00a0\u201cmake recommendations\u201d<\/strong>\u00a0to the Centre and the states on all matters relating to the\u00a0GST.<\/p>\n

In legal terms, the recommendations are not binding on either the Centre or the states. Had the recommendations been binding, it would have been in violation<\/strong> of the legislative supremacy<\/strong> (Tax Sovereignty) of both Parliament and state legislatures.<\/p>\n

The SC ruling also endorses the broader Constitutional position<\/strong> of fiscal federalism. <\/strong>It explicitly placed Centre and individual states on a par with each other in respect of GST. The Article 246(A) provides for concurrent taxation powers<\/strong> of the Centre and the states in relation to the levy of GST.<\/p>\n

The bench has articulated that the GST\u2019s Council\u2019s deliberations<\/strong> have \u201cpersuasive value\u201d.<\/p>\n

Implications of the judgement<\/strong><\/h5>\n

The \u201clandmark\u201d ruling has unintentionally \u201cstirred and shaken federalism\u201d.<\/strong> It has the potential to alter the nature of fiscal federalism<\/strong> in India.<\/p>\n

The GST compensation will end from July 1, 2022. This will trigger dissent in the GST Council. This can lead to disruption and confrontation within the Council.<\/p>\n

The judgment can be used by the GST Council\u00a0members to pursue their agendas, the Centre to renege its committed obligations, or states to get some elbow room on indirect taxation policy.<\/p>\n

The council will be driven more by political consideration<\/strong> than policy persuasions,<\/strong> and performance<\/strong> of the GST regime. The political view<\/strong> that state governments compromised their tax sovereignty<\/strong> in the GST regime is gaining currency.<\/p>\n

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

All decisions of the GST Council have been based on consensus, rather than on voting.<\/p>\n

The GST Council should start and strengthen the dispute resolution mechanism<\/strong>. Article 279A (<\/strong>11) requires the GST Council to establish a mechanism to adjudicate on any disputes arising out of its recommendations and its implementation. This should be in the form of the GTS Tribunal.<\/p>\n

The GST Council must use its status as a constitutional body<\/strong> and skills<\/strong> as an institution to draw up guidelines for adjudication mechanisms<\/strong> to address disputes amongst GST Council members.<\/p>\n

All the stakeholders should be made aware that more than loss of tax sovereignty <\/strong>of states, the GST was premised on pooling<\/strong> of tax sovereignty <\/strong>by both the centre and states.<\/p>\n

The next Finance Commission<\/strong> can recognise the changes in the institutional landscape<\/strong> of the fiscal federalism post-GST Council<\/strong>. A new set of principles will be developed that will empower the states without disempowering the Centre must be worked on.<\/p>\n

The GST Council could work out a state-specific GST <\/strong>outside the existing GST framework. This would transition from a co-operative federalism<\/strong> mindset<\/strong> to a collaborative federal system.<\/strong><\/p>\n

Source<\/strong>: The post is based on an article \u201cStorm in a GST cup<\/strong>\u201d published in the Business Standard<\/strong> on 28th<\/sup> May 2022<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: The Supreme Court has given a ruling on a commercial dispute,\u00a0the Union of India versus Mohit Minerals, over the levy of the integrated goods and services tax\u00a0(GST) on ocean freight charges paid by importers. It has triggered a nationwide debate. About the Judgment The judgment is virtually a recitation from the Article 279A (4)… Continue reading Storm in a GST cup<\/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":[10503,212],"class_list":["post-186933","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-2","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700791809,"cached_date":1704955359},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186933","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=186933"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/186933\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=186933"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=186933"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=186933"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}