Goods and Services Tax (GST) Council is a constitutional body set up under Article 279-A of the Indian Constitution. It makes recommendations to the Union and the State governments on issues related to Goods & Services Tax. It’s a key decision-making body, which takes important decisions regarding the GST. Its predominant responsibility is to ensure one uniform tax rate for goods and services across the country.
In 2016, the Government of India introduced a new tax regime, i.e., the Goods and Service Tax (GST) regime, through the 101st Constitutional Amendment Act of 2016. The smooth and efficient administration of GST requires the proper coordination and cooperation between the Union and the State government.
The 101st Constitutional Amendment Act of 2016 inserted Article 246-A, Article 269-A, and Article 279-A in the Constitution of India.
Article 246-A of the Constitution provided for the special provisions with respect to GST. Under Article 246-A, both the Parliament and State legislature has concurrent powers to make laws governing the GST. The intra-state trade now comes under the jurisdiction of both the Union and the State government, whereas the inter-state trade is exclusively under the Union government’s jurisdiction.
Article 269-A of the Constitution deals with the levy and collection of GST in the course of Inter-State Trade or Commerce. The GST on supplies in the course of inter-state trade are lived and collected by the Centre. But, this tax is divided among both the Centre and the States in the manner provided by the Parliament on the recommendation of the GST council.
To facilitate the consultation process between the Centre and States regarding the GST, the 101st Constitutional Amendment provides to set up Goods and Services Tax Council under Article 279-A. Therefore, Article 279-A of the Constitution provide the power to the President of India to constitute the GST Council by an order.
Composition of the GST Coucil
Goods and Services Tax Council is a joint forum of the Centre and States, comprising of the following members:
- Union Finance Minister be the Chairperson of the Council.
- Union Minister of State in charge of Revenue or Finance as a member of the Council.
- One member from each State who is Minister in charge of Finance or Taxation or any other Minister nominated by State government.
- The members of the Council from the States have to elect one Vice-Chairperson of the Council among themselves. They also decide the term of the vice-chairperson.
- The Union Revenue Secretary be the ex-officio Secretary to the GST Council. The Secretariat of the GST Council is located in New Delhi.
- As decided by the Union Cabinet, the Chairperson of the Central Board of Excise and Customs (CBEC), included as a Permanent Invitee (non-voting) to all the proceedings of the GST Council.
Vision and Mission of GST Council
The vision of the GST Council is to establish the highest standards of the cooperative federation in the functioning of the GST Council. It’s the first constitutional federal body empowered to take all major decisions related to the GST.
The mission of the GST Council is to evolve by the process of the wider consultation, a GST Structure that is user-friendly and information technology-driven.
Working of GST Council
GST Council takes its decisions at its meetings. The quorum for conducting the meeting is one-half of the total number of members of the Council. Every decision of the GST Council is taken by the majority of not less than three-fourths of the weighted votes of the members who are present and voting at the meeting. The decisions of the Council are taken in accordance with the following principles:
- The vote of the Union government shall have a weightage of one-third of the total votes cast in that meeting.
- The votes of all State governments combined shall have a weightage of two-thirds of the total vote cast in that meeting.
Any act, or proceedings, or decisions of the GST Council shall not be declared invalid on the following grounds:
- Whether there is any defect in the Constitution of the Council.
- Whether there is any vacancy remaining.
- Whether there is any defect in the appointment of a person as a Council member.
- Whether there is any procedural irregularity of the Council not affecting the merits of the case.
Functions of the GST Council
GST Council makes recommendations to the Union and States on the following matters:
- Taxes, Cesses, and Surcharges levied by the Centre, States, and local bodies, which would merge under GST.
- The Goods and Services that are subjected to GST or exempted from GST.
- Model of GST laws, principles of levy, allocation of GST on supplies in the course of inter-state trade, and the principles governing the place of supply.
- Any Special rates for a specified period to raise additional resources during the natural calamity.
- Rates including floor rates with GST bands.
- The threshold turnover limit below which Goods and Services may be exempted from the GST.
- Special provision with respect to north-eastern States (Assam, Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, Sikkim) and north States (Jammu & Kashmir, Himachal Pradesh, Uttarakhand)
- Any other matter relating to Good and Services Tax, as may decide by the Council.
In addition to the above functions, The GST Council shall also recommend the date on which the GST may be levied on petroleum crude, motor spirit (petrol), high-speed diesel, natural gas, and aviation turbine fuel.
Whenever there is a dispute related to the recommendations of the Council and their implementation, the GST Council shall set up a mechanism to adjudicate upon the dispute: between the Centre and one or more States; the Centre or any States on one side and one or more other States on the other side; or between two or more States.