Goods and Services Tax Council

The Goods and Services Tax Council is the constitutional forum through which the Union and the States coordinate the structure and administration of GST. Created under Article 279A, it recommends common principles on GST while preserving the legislative powers of Parliament and State Legislatures.

Constitutional mandate

Inserted by the Constitution (One Hundred and First Amendment) Act, 2016, Article 279A requires the President to constitute the Council. Its central role is to recommend a harmonised GST framework to the Union and the States.

• Under Article 279A(4), it recommends which taxes should be subsumed, which goods or services may be exempted, and model GST laws.
• It recommends GST rates, including floor rates with bands, threshold limits, principles governing inter-State supplies, and special rates during natural calamities or disasters.
• It also recommends the date from which GST may be levied on petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel.

Composition and decision-making

The Council embodies fiscal federalism by giving representation to both levels of government.

• The Union Finance Minister is the Chairperson; the Union Minister of State in charge of Revenue or Finance and a minister nominated by each State are members.
• Under Article 279A(7), one-half of the total membership constitutes the quorum.
• Under Article 279A(9), decisions require at least a three-fourths weighted majority of members present and voting. The Union has one-third of the vote, while all States together have two-thirds.

Federal and legal significance

Under Article 279A(6), the Council must be guided by the need for a harmonised GST structure and a harmonised national market. It must also establish a mechanism under Article 279A(11) to adjudicate specified disputes arising from its recommendations or their implementation.

• The Council recommends policy, but GST is imposed through legislation enacted under the Constitution.
• In Union of India v. Mohit Minerals Pvt. Ltd. (2022), the Supreme Court held that its recommendations have persuasive value and are not binding on the Union and the States, reflecting cooperative federalism.