The Supreme Court’s announcement on Thursday that the Goods and Services Tax (GST) Council’s recommendations are not binding on the Center and the states and have only induced prices, is expected to lead to many explanatory problems. While Revenue Secretary Tarun Bajaj says it does not materially change the current GST regime, and it stands as a repeat of the law, many experts say the ruling could open a Pandora’s box that allows states to make certain amendments. In their law. It would be unfortunate if the Supreme Court judgment, given birth to a legal question raised in the Union of India vs. Mohit Minerals, was used to unnecessarily dilute the water. The concern is that the verdict could have unintended consequences, which has only repeated the constitutional position.
“The GST Council’s recommendations are the result of a collaborative dialogue involving the Union and the States and are precisely recommended in nature. Considering their obligations would undermine financial federalism, where both the Union and the States are given equal power to legislate on GST,” the court said. . It argues that “one of the federal units must always have a higher share in the power of the federal units to make decisions”. On top of the fundamentals of GST’s “One Nation, One Market” ideology. To be sure, Indian federalism, as noted by the three-member bench, is in fact a “dialogue between cooperatives and non-cooperative federalism” where various means can be used to mean “from cooperation to competition”. However, this will not help speed up the process of making GST amoebic, thanks to which the political system is pushing it in different directions.
The celebration of the SC verdict by non-BJP finance ministers in several states suggests that they see the ruling as a release from the slanting structure for the Center and agencies such as the Tax Research Unit of the Central Board of Indirect Taxes and Customs. This could be an example of how the GST policy debate could become political in the future. In a year when the states’ GST compensation orders are coming to an end, there is every possibility that every difference in the council will be thrown away as another example of the devaluation of the federal structure.
The GST Council may not be the perfect body, but there are strong mechanisms to work around the issue. In fact, there are very few better examples of cooperative federalism than the current GST regime because it has worked to create the desired uniformity in indirect taxation across the country. In some ways, the Supreme Court has made it clear that the subordinate GST law will be the prerogative of the GST Council, even underlining the Council’s ‘proposed’ status in the primary law. Article 279A of the Constitution, which gives the Council its recommending powers, also makes it a loadster of “developing a coherent national market for goods and services”. With the exception of one example, the decisions of the GST Council have always been by consensus, which speaks volumes about the effectiveness of this system. It is now imperative for the states, especially those governed by non-NDA parties, to work towards the maturation of the GST regime. In this regard, the Center needs to be more responsive to the concerns of the states, especially the process of compensation and instead a debt process to meet the revenue deficit. GST collections in recent months show that India – as a union of states – has a lot to gain from a stable GST system. In order to maintain this momentum, politics has to be pushed back.