Laxmikant Summary Goods and Services Tax Council - Indian Polity for UPSC

Table of Contents
1. Establishment
2. Vision and Mission
3. Composition
4. Working
5. Functions
6. Other Functions and Special Responsibilities
7. Concluding Notes
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Establishment

Goods And Services Tax Council

In 2016, the Joint Amendment Act introduced the framework for a new indirect tax system called the Goods and Services Tax (GST). To implement GST effectively the Constitution was amended to provide for institutional mechanisms ensuring cooperation and coordination between the Union and the states. The amendment inserted Article 279-A into the Constitution and empowered the President to constitute a consultative body known as the Goods and Services Tax Council (GST Council).

Article 279-A of Indian Constitution

• The Joint Amendment Act of 2016 enabled the introduction of the Goods and Services Tax (GST) across India.
• Effective GST implementation requires sustained cooperation and coordination between the central government and state governments.
• To facilitate this cooperation the Constitution provided for a consultative mechanism - the Goods and Services Tax Council.
• The amendment added Article 279-A, under which the President issues an order to constitute the Council.
• In 2016 the President constituted the GST Council by such an order.
• The Council's Secretariat is located in New Delhi.
• The Union Revenue Secretary functions as the ex-officio Secretary to the Council.

Vision and Mission

The GST Council has both a long-term vision and a practical mission aimed at creating a unified national market and an efficient, consultative tax structure. Its functioning is intended to reflect cooperative federalism and to provide a common platform for fiscal coordination.

• The Council should promote a uniform and harmonised structure for the taxation of goods and services.
• The Council should work to create a unified national market for goods and services.
• The Council is responsible for setting procedures for its own functioning so that decisions are taken through consultation.
• The Council's vision includes establishing the highest standards of cooperative federation in tax governance.
• The Council aims to serve as the principal constitutional federal body for decisions on significant matters relating to GST.
• The Council's mission includes developing a coherent GST structure through wide consultations.
• The Council seeks to build an IT-driven and user-friendly administrative framework for GST.

Composition

The GST Council includes representatives of both the Union and the state governments. Membership is structured to ensure participation by all states while keeping the Union in a leading role.

• Chairperson: The Union Finance Minister is the Chairperson of the Council.
• Union Member: The Union Minister of State in charge of Revenue or Finance is a member of the Council.
• State Members: Each state government nominates a Minister in charge of Finance or Taxation or any other Minister as its representative on the Council.
• Vice-Chairperson: The state representatives elect one among themselves as the Vice-Chairperson.
• Term of Vice-Chairperson: The Council members may decide the term of the Vice-Chairperson.
• Permanent Invitee: The Chairperson of the Central Board of Indirect Taxes and Customs (CBIC) is a permanent invitee to Council meetings in a non-voting capacity.
• Secretariat: The Council is supported by a Secretariat based in New Delhi, with the Union Revenue Secretary as ex-officio Secretary.

Working 

• The Council meets periodically and takes decisions in its meetings.
• A meeting is valid only if a quorum is present; the quorum is one-half of the total members of the Council.
• Decisions of the Council require the approval of at least three-fourths of the weighted votes of members present and voting.
• The weight assigned to votes at a meeting is allocated as follows: the central government has one-third of the total weight, and all the state governments combined have two-thirds of the total weight.
• Actions or proceedings of the Council are not invalidated by certain formal defects such as a vacancy, irregularity in appointment of a member, or procedural errors, provided the substance of the proceedings is not affected.

Functions

The Council's primary responsibility is to make recommendations to the Union and state governments on matters relating to the levy, structure and administration of GST. Its duties cover both broad policy decisions and specific procedural rules.

• The Council recommends which taxes, cesses and surcharges levied by the Union, the states and local bodies should be subsumed under GST.
• The Council decides which goods and services will be subject to GST and which will be exempt.
• The Council frames Model GST Laws and prescribes principles for their implementation across jurisdictions.
• The Council determines rules for the place of supply and the mechanism for sharing tax between Union and states in inter-state transactions.
• The Council recommends threshold limits (turnover limits) below which suppliers may be exempted from GST registration or compliance.
• The Council decides the GST rates, including setting minimum rates and rate bands where required.
• The Council may prescribe special rates for limited periods to raise additional resources in times of natural disaster or emergency.
• The Council formulates special provisions applicable to specified states to address regional and developmental needs; these states include Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
• The Council may take up any other issue related to the design, implementation or administration of GST that it considers necessary.

Other Functions and Special Responsibilities

• The Council recommends the date from which GST should be applied to specified petroleum products and fuels such as petroleum crude, high-speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel (ATF).
• The Council provides mechanisms for resolving disputes and disagreements concerning its recommendations and their implementation, including disputes:
• between the Union and one or more states;
• between the Union and any state or states on one side and other state(s) on the other side; and
• among two or more states.
• The Council must recommend measures to compensate states for any loss of revenue arising from the implementation of GST for a period of five years.
• Following the Council's recommendations, the Parliament enacted legislation in 2017 to provide for compensation to states for revenue loss on account of GST implementation.

Concluding Notes

The GST Council is the principal institutional mechanism established by Article 279-A to ensure cooperative decision-making on indirect tax reform in India. Its composition, weighted voting and consultative mandate reflect a balance between the Union's leadership role and the collective interests of the states. The Council's recommendations shape the legal, procedural and rate structure of GST while also providing for transitional arrangements such as compensation to states and special provisions for specific regions.