What is the GST Council, and what role does it play?

The GST Council is a constitutional body in India established to make recommendations on issues related to the Goods and Services Tax (GST). It ensures a cooperative framework where both the central and state governments participate in decision-making regarding indirect taxes.

Provisions and Constitutional Basis

1. Establishment:
   • Article 279A of the Indian Constitution provides for the formation of the GST Council. It was introduced by the 101st Constitutional Amendment Act, 2016.
2. Composition:
   • Chairperson: Union Finance Minister.
   • Members:
     • Union Minister of State (Revenue or Finance).
     • Ministers in charge of Finance or Taxation (or other nominated ministers) of each state.
3. Voting Mechanism:
   • Decisions are made with a majority of not less than three-fourths of the weighted votes:
     • Central Government: One-third of the total votes.
     • State Governments: Two-thirds of the total votes.
4. Powers and Responsibilities:
   • Recommend the tax rates, exemptions, thresholds, and special provisions.
   • Address disputes or implementation issues related to GST.
   • Recommend changes to GST laws and rules.
   • Advise on issues like interstate trade and the GST Compensation Fund.

Role of GST Council

1. Policy Formation:
   • It plays a critical role in determining tax slabs and ensuring uniformity across states.
2. Harmonization:
   • Facilitates a cooperative federalism model by balancing the needs of the central and state governments.
3. Dispute Resolution:
   • Provides a mechanism to resolve disputes between states or between the center and states related to GST.
4. Special Provisions:
   • Recommends special tax concessions for certain sectors or states, like the Northeast or hill states.

Landmark Cases

1. Union of India v. Mohit Minerals Pvt. Ltd. (2022):
   • The Supreme Court ruled that the GST Council’s recommendations are not binding on the central or state governments. This judgment upheld the principles of cooperative federalism, emphasizing that states have the autonomy to implement GST recommendations.
2. Krishna Bhoomi Developers Pvt. Ltd. v. Union of India (2018):
   • This case dealt with the transition provisions under GST, focusing on input tax credit claims and challenges faced by taxpayers during GST implementation.
3. Skill Lotto Solutions Pvt. Ltd. v. Union of India (2020):
   • The Supreme Court upheld the GST on lottery tickets, ruling that taxation of lottery falls within the legislative competence of the GST regime.
4. Calcutta Club Limited v. Commissioner of Service Tax (2019):
   • The Court clarified that GST does not apply to mutual associations under the principle of mutuality (no taxable supply between club and members).

The GST Council has been pivotal in the smooth rollout and functioning of GST, ensuring cooperation between the center and states while navigating challenges in India’s vast and diverse taxation landscape.