In today’s edition of our Current Affairs Dialog box, we will discuss Ruling Of Supreme Court On GST Council. Navigate through the blog to understand the topic in detail and enhance your UPSC CSE preparation. Also, we have listed the topic’s relevance to the UPSC syllabus.

For Prelims: GST, GST Council, Supreme Court

For Mains: Cooperative Federalism and Competitive Federalism challenges of GST

Why in the News?

Recently, the Supreme Court of India (SC), held that Union and State legislatures have equal, simultaneous and unique powers to make laws on Goods and Services Tax (GST) and the recommendations of the GST Council are not binding on either the Union government or the states.

• The apex has rejected the Centre’s argument that the entire structure of GST would crumble if the Council’s mandates are not treated as enforceable.

Also, read our yesterday’s edition of the Current Affairs Dialog box in this linked article.

Probable Question:

What is Goods and Services Tax (GST)? Discuss the possible impact of the SC ruling on GST Council.

Image Source: The Hindu

Key Points

Background

• The apex court’s decision came while confirming a Gujarat High Court ruling that the Centre cannot levy Integrated Goods and Services Tax (IGST) on ocean freight from Indian importers.

Supreme Court Ruling

• The Supreme Court in a judgment championing the importance of “cooperative federalism” for the well-being of democracy, held that Union and State legislatures have “equal, simultaneous and unique powers” to make laws on Goods and Services Tax (GST) and the recommendations of the GST Council are not binding on them.
• The recommendations of the GST Council are the product of a collaborative dialogue involving the Union and the states.
• They are recommendatory in nature. The recommendations only have a persuasive value. 
• To regard them as binding would disrupt fiscal federalism when both the Union and the states are conferred equal power to legislate on GST.
• The court emphasized that Article 246A of the Constitution treats the Union and the States as “equal units”.
  • Article 246A of the Indian Constitution gives the States the power to make laws with respect to GST.
  • Article 279A (constituting the GST Council) envisions that neither the Centre nor the states are actually dependent on the other.

Also Watch:

https://youtu.be/-8FbowsHO5A

Impact of Court Ruling

• This judgement may change the landscape of those provisions under GST which are subject to judicial review.
  • This is because the constitutionality of such provisions can be challenged based on GST Council recommendations.
• The judgment also resolved a prolonged battle the government has been raging against companies to implement its IGST on ocean freight on reverse charge basis.
• The decision will foster the spirit of cooperative federalism by emphasizing the importance of cooperative federalism as a vital component of democracy's well-being.

Download the PrepLadder app to amplify your UPSC CSE prep and to experience a revolution in UPSC CSE education.

You can also join our Telegram channel for UPSC exam preparation to apprise yourself with the latest information about the exam.

Own Your Dream

Team PrepLadder