GST Coun­cil ............................................................

Libertatem Magazine - - Content - By Vaib­hav Sharma

The Goods and Ser­vice Tax (GST) is the lat­est in­tro­duc­tion to the In­dian tax­a­tion regime. The GST sys­tem will re­place the ex­ist­ing in­di­rect taxes and thereby in­crease the cov­er­age base for the bet­ter col­lec­tion of taxes. Pat­tern of lead­ing tax­a­tion laws of the Euro­pean na­tions with re­spect to the novel meth­ods of tax col­lec­tion will re­move the dif­fi­cul­ties of tax eva­sions and leak­ages at var­i­ous lev­els and in­ter­state dis­par­i­ties in the rates of tax­a­tion. The Par­lia­ment passed the 122nd Con­sti­tu­tional Amend­ment, 2011 ear­lier this year to grant sanc­tity to the law. Among the salient pro­vi­sions of the said Amend­ment, The GST Coun­cil is the most sig­nif­i­cant one.


The GST Coun­cil is the key de­ci­sion-mak­ing body un­der the GST Tax regime. The Union Cabi­net un­der the chair­man­ship of the Prime Min­is­ter ap­proved the set­ting up of the GST Coun­cil on 12th Septem­ber, 2016. The Cabi­net also gave as­sent to cre­ate the GST Coun­cil Sec­re­tariat to be head­quar­tered in New Delhi. The said

GST Coun­cil is de­scribed un­der Ar­ti­cle 279A of the Con­sti­tu­tion of In­dia. The GST Coun­cil will com­prise of the Union Fi­nance Min­is­ter as the Chair­man of the Coun­cil.

The Union Min­is­ter of State for the Rev­enue will also be its mem­ber along with the Min­is­ter-in-charge of tax­a­tion nom­i­nated by each state gov­ern­ment. The most im­por­tant as­pect of the GST Coun­cil is that the im­por­tant de­ci­sions of the Coun­cil will be taken by the three-fourth ma­jor­ity of the Coun­cil. It is per­ti­nent to note that un­der the said pro­vi­sion, the Cen­tre will have one-third of the votes and the rest two-third will be be­tween the var­i­ous states. The pro­vi­sion is seen as a vi­tal safe­guard to pre­vent the Cen­tre from im­pos­ing its de­ci­sions on the State Gov­ern­ments.


Ar­ti­cle 279A(4) of the Con­sti­tu­tion pro­vides that the GST Coun­cil will be en­trusted will the re­spon­si­bil­ity of mak­ing rec­om­men­da­tions as re­gards the var­i­ous taxes, sur­charges and cesses which will be sub­sumed by the GST Tax. It will also de­cide the items which will be ex­empted from tax and the thresh­old limit of the turnover for the ap­pli­ca­tion of GST Tax. It will make the model rules and reg­u­la­tions for

the said Coun­cil’s work­ing. The Sec­re­tariat will act as the ex­ec­u­tive sup­port for the Coun­cil and will take care of the as­pect of doc­u­ment­ing the law. The Rev­enue Sec­re­tary of the Gov­ern­ment of In­dia will be the ex-of­fi­cio Sec­re­tary of the GST Coun­cil. The Chair­man of the Cen­tral Board of Ex­cise and Cus­toms (CBEC) will also be the mem­ber of the GST Coun­cil, though he will not be hav­ing vot­ing rights.

The GST Coun­cil will func­tion as the dis­pute res­o­lu­tion body for the tax­a­tion regime. The var­i­ous con­tentious is­sues like the ex­emp­tion of items, rate of tax­a­tion, etc. have to be de­lib­er­ated upon in the GST Coun­cil for work­ing out the am­i­ca­ble so­lu­tions for the same. The Coun­cil will be like the leg­is­la­ture for the GST sys­tem in which the rec­om­men­da­tions will be voted upon by the mem­bers. Since ev­ery state would have its nom­i­nated rep­re­sen­ta­tive in the Coun­cil, the con­cerns of all the states will be taken into con­sid­er­a­tion by the Coun­cil. The Coun­cil will also be try­ing to evolve out a con­sen­sus on the var­i­ous is­sues be­fore go­ing for the bal­lot. The most piv­otal fea­ture of the GST Coun­cil is that it grants equal vote to ev­ery state of In­dia. The equal vote fea­ture would mean that whether it is the in­dus­trial states like Ma­ha­rash­tra and Kar­nataka, or the hilly states like Sikkim or Hi­machal Pradesh, the weigh­tage of the vote will be the same. The pro­vi­sion has been crit­i­cised by Tamil Nadu state gov­ern­ment as be­ing wrong since the in­ter­ests of big­ger states which col­lect greater taxes have not been paid heed to. But the pro­vi­sion seems to be in­cor­po­rated in the demo­cratic spirit to counter the dom­i­nance of the larger states. The spe­cial ex­emp­tion pro­vi­sion has also been made out in favour of the hilly states like Hi­machal Pradesh or the North-east­ern States for which the dif­fer­ent lim­its of tax­a­tion could be set. It is to safe­guard their in­ter­ests as they don’t con­trib­ute a larger quan­tum of tax for hav­ing a smaller tax base.


The Union Gov­ern­ment has re­cently in­cor­po­rated the GST Coun­cil and its Sec­re­tariat. It is seen as a ma­jor step for the gov­ern­ment dead­line of 1st April, 2017 set for the en­force­ment of the GST law. The GST Coun­cil has al­ready had two of its meet­ings in the month of Septem­ber, 2016. In the first meet­ing of the Coun­cil, the in­tri­cate de­tails of the work­ing as­pect of the law were dis­cussed. The rules and reg­u­la­tions of the Coun­cil, along with the time in­ter­vals for its meet­ings be­ing de­cided by the Coun­cil. The crit­i­cal con­sen­sus in the meet­ing was reached on the is­sue of the thresh­old limit of turnover for the busi­ness to be set at ₹20 lakhs in or­der to avoid the has­sle for smaller busi­nesses. The meet­ing also saw the in­cor­po­ra­tion of the draft com­pen­sa­tion for­mula in or­der to make good the losses suf­fered by the state due to the in­cor­po­ra­tion of GST. The Cen­tral Gov­ern­ment has de­cided to grant the power to the state for the as­sess­ment of the an­nual turnover up to ₹1.5 crores which ear­lier re­mained with the Cen­tral Board of Ex­cise and Cus­toms (CBEC). This has been seen as an in­di­ca­tion for the grant of greater au­ton­omy to the states in col­lec­tion of the taxes. The strik­ing fea­ture of the meet­ing was the com­mit­ment of the Cen­tre to evolve out a con­sen­sus over the main is­sues rather than try­ing to push the pro­vi­sions through its ma­jor­ity and sup­port of al­lied state gov­ern­ments.

The sec­ond meet­ing of the GST Coun­cil was held on 30th Septem­ber, 2016. The meet­ing showed the first signs of dis­pute aris­ing as the min­utes of the ear­lier meet­ings could not be adopted since Tamil Nadu and West Ben­gal said that they still have reser­va­tions about the de­ci­sions taken in the meet­ing. This crit­i­cal is­sue was dis­cussed at length in the sec­ond meet­ing along with the treat­ment of ser­vices, but no con­sen­sus could be adopted in this re­gard. The GST Coun­cil de­cided to form a com­mit­tee com­pris­ing of both the Cen­tral and state gov­ern­ments' of­fi­cials in or­der to re­solve the is­sue. The break­through was achieved with re­gard to draft rules per­tain­ing to reg­is­tra­tion, pay­ment, re­fund, re­turns and in­voice mech­a­nisms for grant­ing the area-wise tax ex­emp­tions. The adop­tion of the rules is be­ing seen as a ma­jor mile­stone for the gov­ern­ment in its ad­her­ence of the 1st April dead­line for the law to be­come ef­fec­tive through­out the nation.


The Fi­nance Min­is­ter Mr. Arun Jait­ley ex­pressed hope that the is­sues will be re­solved at the ear­li­est. He also in­formed that the con­tentious is­sue of the tax rates will be dealt with in the next meet­ing of the GST Coun­cil. The dis­cus­sions will also be held on draft state and cen­tre GST Bills. The sec­ond meet­ing also brought about the dif­fer­ences be­tween var­i­ous states. It is a sign of frac­ture and it will serve in the fu­ture as a sign of cau­tion for the Cen­tral Gov­ern­ment to pro­ceed care­fully in the di­rec­tion of tax­a­tion. The next meet­ing of the Coun­cil is sched­uled to be held on 18th Oc­to­ber, 2016. The meet­ing is very im­por­tant as it will de­cide upon the is­sue of the rate of tax­a­tion. It will be in the best in­ter­est of the nation that the gov­ern­ment man­ages to re­solve the dead­lock over the piv­otal is­sues and the pro­vi­sions are rat­i­fied by the coun­cil at the ear­li­est in or­der to set the new regime in mo­tion that is seen as the roadmap of In­dia’s ro­bust tax­a­tion sys­tem to aug­ment the govern­men­tal re­sources for the growth and de­vel­op­ment of the coun­try.

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