Article 279A

Article 279A of the Constitution of India establishes the Goods and Services Tax (GST) Council, the principal constitutional body responsible for governing and regulating the implementation of the Goods and Services Tax (GST) across the Union and the States. Introduced through the Constitution (One Hundred and First Amendment) Act, 2016, Article 279A embodies the principle of cooperative federalism, ensuring that both levels of government work in coordination to maintain a unified indirect tax system throughout India.

Constitutional Background

The introduction of GST marked a historic reform in India’s taxation system, replacing a multitude of central and state indirect taxes with a single, comprehensive tax structure. Article 279A was incorporated to provide a constitutional mechanism for joint decision-making between the Union and the States on matters concerning the design, rates, exemptions, and administration of GST.
As mandated, the President of India was required to constitute the GST Council within 60 days of the commencement of the 101st Amendment, which came into effect on 8 September 2016. Accordingly, the GST Council was constituted on 12 September 2016, paving the way for the implementation of GST from 1 July 2017.

Composition of the GST Council

Under Article 279A(2), the GST Council comprises the following members:

• Union Finance Minister – Chairperson of the Council.
• Union Minister of State in charge of Revenue or Finance – Member.
• Ministers in charge of Finance or Taxation from each State – Members representing the respective States.

Additionally, members representing the States elect a Vice-Chairperson from among themselves to assist in coordinating the Council’s functions.
This composition ensures joint representation from the Union and all States, reflecting the federal nature of the Indian polity and ensuring inclusive participation in taxation policy.

Functions and Powers of the GST Council

Article 279A(4) vests the GST Council with extensive advisory and recommendatory powers. The Council makes recommendations to the Union and the States on key aspects of GST, including:

• Taxes, cesses, and surcharges of the Union, States, and local bodies that may be subsumed under GST.
• Goods and services that should be subjected to or exempted from GST.
• The model GST laws, including the principles governing levy, collection, and place of supply.
• The threshold turnover limits for exemption from GST registration.
• The rates of GST, including floor rates with permissible bands, and special rates for exigencies such as natural disasters.
• Apportionment of Integrated GST (IGST) collected on inter-State transactions between the Union and the destination States.
• Special provisions for certain States, including those in the North-East, hill States, and Union territories.

These powers ensure that the Council operates as the central policy-making body for all GST-related decisions, guaranteeing uniformity across the country.

Decision-Making Process

The decision-making procedure of the GST Council is defined in Article 279A(9). Every decision is made by a majority of not less than three-fourths of the weighted votes of members present and voting. The voting weight is distributed as follows:

• The Central Government has one-third of the total votes.
• The State Governments collectively have two-thirds of the total votes.

This arrangement ensures that no decision can be made unilaterally by either the Union or the States, reinforcing the principle of consensus-driven cooperative federalism.

Validity of Proceedings

To ensure procedural continuity, Article 279A(10) provides that the acts or proceedings of the Council are not rendered invalid due to:

• Vacancies or defects in its constitution,
• Defects in the appointment or qualification of any member, or
• Procedural irregularities that do not affect the merits of the case.

This provision maintains the Council’s operational stability even in the event of administrative discrepancies.

Dispute Resolution Mechanism

Under Article 279A(11), the GST Council is required to establish a mechanism for adjudicating disputes that may arise between:

• The Government of India and one or more States,
• The Government of India and multiple States, or
• Two or more States themselves.

This ensures that disagreements relating to the interpretation or implementation of GST laws are resolved within a constitutional and institutional framework, rather than through political negotiations.

Judicial Interpretations and Case Law

The judiciary has, in several cases, examined the constitutional role and functioning of the GST Council:

• Mohit Minerals Pvt. Ltd. v. Union of India (2021) – The Supreme Court upheld the constitutional validity of the GST framework while clarifying that the recommendations of the GST Council are advisory, not binding. The Court emphasised that both the Union and the States retain their legislative autonomy under Article 246A, and that cooperative federalism is achieved through dialogue and consensus, not compulsion.
• Special Leave Petition (Civil) No. 10355 of 2020 – The Court reaffirmed the advisory and policy-making role of the GST Council and underscored the importance of collaborative decision-making.

These judgments reinforce the federal balance inherent in Article 279A, ensuring that the Council operates as a coordinating forum rather than a superior legislative authority.

Significance of the GST Council

The GST Council is widely regarded as a landmark institutional innovation in India’s fiscal federalism. Its significance can be summarised as follows:

• Ensures uniformity in indirect taxation across States.
• Promotes cooperative federalism by bringing the Union and States together in policy formulation.
• Enables harmonisation of tax rates, preventing tax cascading and promoting ease of doing business.
• Facilitates regular dialogue and consensus-building, reducing inter-governmental conflicts.
• Provides a platform for fiscal coordination, crucial for implementing economic reforms across the country.

Related Constitutional Articles

Article 279A operates in conjunction with other key fiscal provisions introduced by the 101st Amendment:

• Article 246A: Empowers both Parliament and the State Legislatures to make laws on GST.
• Article 269A: Governs the levy and collection of GST on inter-State trade or commerce, with apportionment between the Union and the destination States.
• Article 279: Defines the calculation of “net proceeds” of taxes and duties.

Together, these provisions form the constitutional framework for GST, ensuring both legal and administrative coherence.

Implementation and Timeline

Following the enactment of the 101st Amendment, the GST Council was constituted in September 2016, and GST came into effect on 1 July 2017. The Council has since held regular meetings to revise tax rates, rationalise exemptions, and address compliance issues, making it one of the most active intergovernmental bodies in India.

Challenges Faced by the GST Council

Despite its success, the GST Council has encountered several practical and policy challenges, including:

• Revenue-sharing disputes between the Centre and States, particularly during economic downturns.
• Compliance complexities for small and medium enterprises (SMEs).
• Frequent amendments to GST laws and rates to address operational difficulties.
• Managing compensation payments to States for revenue shortfalls post-GST implementation.

These challenges highlight the evolving nature of India’s fiscal federalism and the need for continuous cooperation and reform.

Contemporary Relevance and Constitutional Significance

Article 279A stands as a testament to dynamic federal governance in India. The GST Council represents a federal compact where the Centre and the States jointly frame taxation policy within a constitutional framework of consultation and consensus.
By institutionalising intergovernmental collaboration, Article 279A has transformed India’s indirect tax system into a modern, harmonised, and transparent regime, fostering economic integration and strengthening the unity of the Indian market.