Goods and Services Tax (Gst): Governance, Council, and Administration

The Goods and Services Tax (GST) is a comprehensive destination-based indirect tax structure implemented across India on July 1, 2017, through the 101st Constitutional Amendment Act, 2016. It subsumed central taxes like Central Excise Duty and Service Tax, alongside state taxes like Value Added Tax (VAT), Entry Tax, and Luxury Tax, establishing a single indirect tax regime. The administration of GST operates through a shared federal governance architecture comprising the GST Council, administrative taxation departments, digital infrastructure managed by the Goods and Services Tax Network (GSTN), and appellate mechanisms under the GST Appellate Tribunal (GSTAT).

Constitutional Provisions and Architecture

Constitutional Amendments

• Article 246A gives concurrent power to Parliament and State Legislatures to make laws regarding GST imposed by the Centre and the States.
• Article 246A(2) gives exclusive power to Parliament to make laws regarding GST where the supply of goods or services takes place in the course of inter-state trade or commerce.
• Article 269A specifies that GST on supplies in the course of inter-state trade or commerce is collected by the Government of India and apportioned between the Union and the States based on GST Council recommendations.
• Article 279A empowered the President of India to constitute the GST Council within sixty days of the commencement of the 101st Amendment Act.

GST Components and Dual Model

• Central GST (CGST) is levied by the Central Government on intra-state supplies of goods and services.
• State GST (SGST) or Union Territory GST (UTGST) is levied by State Governments or Union Territories on intra-state supplies.
• Integrated GST (IGST) is levied by the Central Government on inter-state supplies and imports of goods and services.
• GST applies to all goods and services except human alcohol for consumption, while crude petroleum, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel remain temporarily outside the tax net until the GST Council recommends their inclusion.

GST Council: Constitutional Governance Body

Structure and Composition

• The GST Council is a joint constitutional forum established under Article 279A, headquartered in New Delhi.
• The Union Finance Minister serves as the ex-officio Chairperson of the Council.
• The Union Minister of State in charge of Revenue or Finance serves as a member representing the Centre.
• The Minister in charge of Finance or Taxation, or any other Minister nominated by each State Government, serves as a member representing the States.
• Members select a Vice-Chairperson from among the representatives of the State Governments.
• The Union Revenue Secretary acts as the ex-officio Secretary to the GST Council Secretariat.

Decision-Making and Voting Mechanism

• One-half of the total number of members of the GST Council constitutes the quorum for its meetings.
• Every decision of the Council is taken by a majority of at least three-fourths (75%) of the weighted votes of the members present and voting.
• The vote of the Central Government carries a weightage of one-third (33.33%) of the total votes cast in that meeting.
• The combined votes of all State Governments carry a weightage of two-thirds (66.67%) of the total votes cast.

Mandatory Functions and Recommendations

• Recommending goods and services that may be subjected to or exempted from GST.
• Formulating model GST laws, principles governing Place of Supply, and threshold limits for registration.
• Determining GST tax rates, including standard slab rates, special rates during natural disasters, and floor rates with bands.
• Recommending special provisions for the eleven special category states: Arunachal Pradesh, Assam, Jammu and Kashmir, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, and Uttarakhand.

Administrative and Judicial Infrastructure

Administrative Hierarchy and Revenue Sharing

• Central Board of Indirect Taxes and Customs (CBIC) oversees the central administration of CGST and IGST under the Department of Revenue, Ministry of Finance.
• State Commercial Tax Departments manage local administration, audit, and collection of SGST.
• Cross-empowerment mechanisms allow central tax officers and state tax officers to initiate enforcement actions under respective statutes to prevent dual administration.
• IGST revenue is allocated between the Centre and the destination State based on consumption rules.

Goods and Services Tax Network (GSTN)

• GSTN is a non-government, private limited company incorporated in 2013 under Section 8 of the Companies Act, 2013, created to supply shared IT infrastructure.
• In 2018, the Government of India approved converting GSTN into a 100% government-owned entity, split equally (50% each) between the Central Government and State Governments.
• GSTN handles frontend user functions like taxpayer registration, return filing, tax payment processing, and e-way bill generation.
• It maintains the central database matching Input Tax Credit (ITC) claims between buyers and suppliers across India.

GST Appellate Tribunal (GSTAT)

• Constituted under Section 109 of the Central Goods and Services Tax (CGST) Act, 2017, to hear second appeals against orders passed by Appellate or Revisional authorities.
• The Principal Bench of GSTAT is situated in New Delhi and is headed by a President, comprising judicial and technical members.
• State Benches are established across various states based on recommendations of the GST Council to process regional tax appeals.
• Decisions of GSTAT on questions of law can be appealed directly to the High Court, except where the order relates to the place of supply, which goes directly to the Supreme Court.

Key Exam-Oriented Facts

• France was the first country in the world to implement a GST system in 1954.
• India adopted the Canadian dual-GST model, where taxation authority is shared simultaneously between the federal government and regional governments.
• The Kelkar Task Force on Implementation of the Fiscal Responsibility and Budget Management (FRBM) Act in 2004 first recommended a comprehensive national GST for India.
• The 101st Constitutional Amendment Act, 2016 received Presidential assent on September 8, 2016, and came into force on September 16, 2016.
• Article 279A(5) states that the GST Council will decide the date on which GST will be levied on petroleum crude, high-speed diesel, motor spirit (petrol), natural gas, and aviation turbine fuel.
• In the Union of India v. Mohit Minerals Pvt. Ltd. (2022) case, the Supreme Court ruled that recommendations of the GST Council carry persuasive value and are not binding on Parliament or State Legislatures.
• The GST Compensation to States Act, 2017 guaranteed full compensation to states for any revenue loss arising from GST implementation for a transition period of five years.
• Assam was the first Indian state to ratify the GST Constitutional Amendment Bill in August 2016.