{"id":188313,"date":"2022-06-03T20:57:47","date_gmt":"2022-06-03T15:27:47","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=188313"},"modified":"2022-06-03T20:59:21","modified_gmt":"2022-06-03T15:29:21","slug":"gst-council-must-uphold-fiscal-federalism","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/gst-council-must-uphold-fiscal-federalism\/","title":{"rendered":"GST Council must uphold fiscal federalism"},"content":{"rendered":"\n

News: <\/strong>Recently, the Supreme Court has given its verdict on the nature of recommendations made by the GST Council. The verdict included an important observation on Indian federalism,<\/strong> especially on it being a dialogue<\/strong> between cooperative<\/strong> and uncooperative federalism<\/strong>.<\/p>\n

Background of the Case<\/strong><\/h5>\n

The case was an appeal to the SC against the Gujarat High Court Judgment which had quashed the two notifications that levied IGST<\/strong> (Integrated GST) on the ocean freight<\/strong> component in a CIF (cost, insurance and freight) contract on account of being unconstitutional<\/strong> and double taxation<\/strong>.<\/p>\n

Submissions by the Union of India<\/strong><\/h5>\n

As per Articles 246A and 279A, the GST Council is the ultimate policy-making<\/strong> and decision-making body<\/strong> for framing GST laws.<\/p>\n

The GST Council recommendations<\/strong> would override<\/strong> the legislative power<\/strong> of Parliament and state legislatures and would be binding<\/strong> on Parliament and state legislatures.<\/p>\n

The Supreme Court\u2019s Observations on federalism in this case<\/strong><\/h5>\n

The SC rejected the UOI submissions. It held that the sovereignty of Parliament and the state legislatures, as well as the fiscal autonomy of the states cannot be diminished.<\/p>\n

Democracy and federalism are interdependent for their survival. If the states had been conferred less power, they could still resist the Union mandate through different forms of political contestation<\/strong> as permitted by constitutional design<\/strong>.<\/p>\n

Article 246A<\/strong> confers simultaneous<\/strong> or concurrent powers<\/strong> on Parliament and the state legislatures to make laws relating to GST. It is unlike the constitutional scheme that prevailed till 2017 in which taxing powers were clearly demarcated<\/strong> between the Centre and states with no overlaps.<\/p>\n

Under Article 279A<\/strong>, the GST Council has to make \u201crecommendations<\/strong>\u201d on various topics including the tax rate and exemptions.<\/p>\n

The GST Council recommendations have only a persuasive value<\/strong>. Both the Union and states have been conferred equal power to legislate on GST. The binding recommendations would disrupt fiscal federalism.<\/strong><\/p>\n

Article 279A has made no provision to make the decision of the majority binding<\/strong> on the dissenting states. Several sections in the state GST laws, CGST and IGST have made it binding on dissenting states<\/strong> to issue notifications to implement<\/strong> the recommendations of the GST Council.<\/p>\n

The court held that the states are free to use means of<\/strong> persuasion<\/strong> ranging from collaboration<\/strong> to contestation<\/strong> on federalism in general, and fiscal federalism in particular.<\/p>\n

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

The state legislatures can amend their GST laws if they so choose to remove the binding nature in the statutes.<\/p>\n

The GST Council is founded on the bedrock of collaborative federalism<\/strong>. The GST Council should meet periodically. There should be active participati<\/strong>on of all the states so that there is careful deliberation in the national interest. Thereafter, no state will oppose the GST Council recommendation.<\/p>\n

The spirit of cooperative<\/strong> and collaborative federalism<\/strong> should prevail in the functioning of the GST Council.<\/p>\n

Source<\/strong>: The post is based on an article \u201cGST Council must hold fiscal federalism<\/strong>\u201d published in the Indian Express<\/strong> on 3rd<\/sup> June 2022<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

News: Recently, the Supreme Court has given its verdict on the nature of recommendations made by the GST Council. The verdict included an important observation on Indian federalism, especially on it being a dialogue between cooperative and uncooperative federalism. Background of the Case The case was an appeal to the SC against the Gujarat High… Continue reading GST Council must uphold 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":[212,10500],"class_list":["post-188313","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-2","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":12,"cached_at":1698368663,"cached_date":1698466620},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/188313","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=188313"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/188313\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=188313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=188313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=188313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}