Goods and Services Tax Council (Article 279A)

At a Glance

• What it is Joint forum of the Centre and states on GST
• Article Article 279A (101st Amendment Act, 2016)
• Chair Union Finance Minister
• Decision rule Three-fourths of weighted votes of members present and voting
• Exam link UPSC Prelims, Polity: Constitutional Bodies

Where Does It Fit?

This is the last topic of the category on Constitutional Bodies. The 101st Amendment Act of 2016 paved the way for the goods and services tax regime. Smooth administration of the tax needs cooperation and coordination between the Centre and the states, so the amendment inserted Article 279A, empowering the President to constitute a GST Council by order. The President issued the order on 15 September 2016.

Vision, Mission and Secretariat

The Council is guided by the need for a harmonised structure of GST and the development of a harmonised national market for goods and services, and it determines its own procedure. Its vision is to establish the highest standards of cooperative federation in its functioning, as the first constitutional federal body vested with powers to take all major decisions relating to GST. Its mission is to evolve, through wider consultation, a GST structure that is information technology driven and user friendly. The Secretariat is in New Delhi, and the Union Revenue Secretary is the ex-officio Secretary to the Council.

Composition

The Council is a joint forum of the Centre and the states and consists of the Union Finance Minister as Chairperson, the Union Minister of State in charge of Revenue or Finance, and the Minister in charge of Finance or Taxation or any other Minister nominated by each state government. The members from the states choose one among themselves as Vice-Chairperson and may decide his or her term. The Union Cabinet also decided to include the Chairperson of the Central Board of Indirect Taxes and Customs as a permanent, non-voting invitee to all proceedings of the Council.

Working and Voting

Decisions are taken at meetings. One-half of the total number of members constitutes the quorum. Every decision is taken by a majority of not less than three-fourths of the weighted votes of the members present and voting, following two principles: the vote of the central government has a weightage of one-third of the total votes cast in that meeting, and the votes of all state governments combined have a weightage of two-thirds. No act or proceeding of the Council is invalid merely because of a vacancy or defect in the constitution of the Council, a defect in the appointment of a member, or a procedural irregularity not affecting the merits of the case.

Functions

The Council makes recommendations to the Centre and the states on:

1. The taxes, cesses and surcharges levied by the Centre, states and local bodies that would be merged in GST.
2. The goods and services that may be subjected to or exempted from GST.
3. Model GST laws, principles of levy, apportionment of GST on inter-state supplies, and the principles governing the place of supply.
4. The threshold limit of turnover below which goods and services may be exempted.
5. The rates, including floor rates with bands of GST.
6. Any special rate or rates for a specified period to raise additional resources during any natural calamity or disaster.
7. Special provision with respect to Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, Uttarakhand and the erstwhile Jammu and Kashmir.
8. Any other matter relating to GST that the Council may decide.

Other Functions

The Council recommends the date on which GST may be levied on petroleum crude, high speed diesel, motor spirit (petrol), natural gas and aviation turbine fuel. When there is a dispute about its recommendations or their implementation, it establishes a mechanism to adjudicate the dispute between the Centre and one or more states, between the Centre and some states on one side and other states on the other, or between two or more states. It also recommends the compensation to the states for loss of revenue arising from the introduction of GST for a period of five years, on which Parliament determines the compensation. Parliament enacted the Goods and Services Tax (Compensation to States) Act, 2017 accordingly.

The Jammu and Kashmir Reorganisation Act, 2019 bifurcated the erstwhile state into two Union territories, Jammu and Kashmir and Ladakh.

Why Is This Topic Important?

• Recent body Added by the 101st Amendment
• Voting rule Weightage is a favourite statement
• Cooperative federalism Mains angle

What Came Next?

The next category covers Non-Constitutional Bodies, beginning with NITI Aayog.

Key People and Terms

• Article 279A GST Council
• 101st Amendment Introduced the GST regime
• Weighted votes Centre one-third; states two-thirds
• Quorum One-half of members
• Compensation For revenue loss due to GST

Exam Corner

Mains Angle

Questions on this topic usually ask about cooperative federalism in the GST Council. Use these points to add depth.

• Cooperative federalism Joint forum of Centre and states
• Weighted voting No single side can decide alone
• Dispute mechanism Adjudication of disputes
• Compensation Five-year assurance