The GST Council and Constitutional Restraints

The introduction of the Goods and Services Tax (GST) brought a major change in India's indirect tax system. Earlier, many different taxes were levied by the Centre and the States which made the system complicated and uneven. GST replaced all these separate taxes with one common tax across the country. To support cooperative federalism in this new system, the Constitution (One Hundred and First Amendment) Act, 2016 inserts Article 279A therein which establishes the GST Council as a constitutional body. The GST Council helps the Union and the States work together by recommending GST rates, exemptions, rules and procedures. Its decisions ensure that GST policies are uniform, balanced and based on consensus, as envisioned by the Constitution.

Article 279A establishes the GST Council and empowers it to make recommendations to the Union and the States on important matters such as taxes, cesses, tax rates, exemptions, model GST laws and all other issues related to the GST. The key features of the GST Council are as follows:

• It is a constitutional institution created under Article 279A.
• It is not a law making legislature.
• It is authorised to make recommendations on specific GST related subjects such as rates, exemptions, and model laws.
• Its recommendations do not have binding force.
• GST Council guide the Union and the States but do not override their legislative powers.
• It does not supervise or control the functioning of Parliament or State Legislatures.

The Hon'ble Supreme Court in Union of India & Anr. Versus M/s Mohit Minerals Pvt. Ltd. Through Director - 2022 (5) TMI 968 - Supreme Court

has held that :

• The GST Council is a platform for cooperative federalism.
• The recommendations of the GST Council have persuasive value.
• Parliament and State Legislatures retain plenary legislative value under the Constitution.

The GST Council, a constitutional body, has been established only to make recommendations to the Union and the States on matters related to GST with the primary objective of promoting cooperative federalism in tax policy. The language of Article 279A Constitution is explicit and unambiguous. The Constitution establishes the GST Council as a forum for consultation and coordination and not as a law making or supervisory authority. Its role is advisory in nature.

The GST Council, established under Article 279A, is a constitutional forum established to foster cooperative federalism by making recommendations to the Union and the States on GST related matters. Its role is expressly advisory and not legislative. Neither the Constitution nor the GST statutes define 'recommendation' in technical terms but the scheme and practice make clear that a recommendation is a non binding, advisory opinion intended to guide policy choices rather than to command them. Such recommendations carry persuasive weight, reflecting collective deliberation by Union and States. They neither create legal obligations nor override statutory or constitutional powers and have no force of law unless and until the competent legislature or executive adopts them.

The GST Council has no power to approve, sanction, validate, ratify, endorse or authenticate the acts of a legislature, executive, or other decision maker. Its constitutional mandate under Article 279A is confined to making recommendations on GST related matters. Any purported exercise of authority by the Council beyond issuing recommendations would be ultra vires the constitutional scheme, lacking legal foundation and inconsistent with the Council's advisory role as envisaged by the Constitution.

Conclusion:

A holistic reading of Article 279A and the GST enactments makes clear that the GST Council is a purely recommendatory constitutional forum. Its sole constitutional function is to make recommendations to the Union and the States on GST related matters. It has no power to approve, sanction, validate, ratify, endorse or authenticate legislative or executive acts nor can it cure statutory defects. Any purported exercise of such powers would be ultra vires the constitutional scheme and inconsistent with the Council's role as a platform for cooperative federalism. The Council's outputs are persuasive and useful for coordination but they acquire binding effect only when the competent legislature or executive formally adopts them through the proper legal process.