Goods and Services Tax : Institutional Framework Including Gst Council and Cbic’S Role

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax system implemented in India on July 1. 2017. Introduced through the 101st Constitutional Amendment Act, 2016, GST subsumed numerous central and state indirect taxes to create a unified national market. The institutional framework governing GST relies on a cooperative federal structure, primarily anchored by the statutory decision-making body—the GST Council—and the administrative enforcement machinery led by the Central Board of Indirect Taxes and Customs (CBIC) along with state tax departments.

Constitutional Basis and Legislative Architecture

The 101st Constitutional Amendment Act introduced essential constitutional modifications to empower both Parliament and State Legislatures to levy and collect indirect taxes concurrently.

Key Constitutional Articles

• Article 246A: Grants concurrent powers to Parliament and State Legislatures to make laws regarding GST. Parliament retains exclusive power to make laws for GST on inter-state trade or commerce (IGST).
• Article 279A: Authorizes the President of India to constitute the GST Council as a joint forum of the Centre and States.
• Article 269A: Mandates that GST on supplies in the course of inter-state trade or commerce shall be levied and collected by the Government of India and apportioned between the Union and the States based on GST Council recommendations.

Structure of GST Acts

The legislative framework comprises four main components:

• Central GST (CGST) Act, 2017: Governs intra-state supplies levied by the Centre.
• State GST (SGST) Acts, 2017: Passed by respective state legislatures to govern intra-state supplies levied by the states.
• Integrated GST (IGST) Act, 2017: Governs inter-state movement of goods and services, collected by the Centre and shared with the destination state.
• Union Territory GST (UTGST) Act, 2017: Applies to Union Territories without a legislature (Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Ladakh, and Chandigarh).

The GST Council: Structure, Voting Pattern, and Functions

The GST Council serves as the apex constitutional decision-making body for all policy matters relating to GST structure, rates, exemptions, and administrative thresholds.

Composition of the Council

• Chairperson: Union Finance Minister.
• Members: 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).
• Vice-Chairperson: Chosen by state government members from among themselves.

Voting Mechanism and Decision-Making Rules

Decisions in the GST Council require a three-fourths (75%) majority of weighted votes cast by members present and voting.

Key Functions and Responsibilities

• Recommending tax rates, exemption lists, threshold limits for registration, and composition schemes.
• Framing model GST laws, principles of levy, apportionment of IGST, and place-of-supply rules.
• Recommending special provisions for North-Eastern states, Jammu and Kashmir, Himachal Pradesh, and Uttarakhand.
• Resolving disputes arising out of its recommendations among member governments.

Central Board of Indirect Taxes and Customs (CBIC)

The Central Board of Indirect Taxes and Customs (CBIC), operating under the Department of Revenue, Ministry of Finance, functions as the central administrative authority for operationalizing GST rules and enforcement.

Organizational Structure and Administrative Role

• Formerly known as the Central Board of Excise and Customs (CBEC), it was renamed in 2018 following the implementation of GST.
• Headed by a Chairperson and six executive Members holding the rank of Special Secretary to the Government of India.
• Oversees Principal Chief Commissioners, Chief Commissioners, Commissioners of Central Tax, and field formations across administrative zones.

Key Operational Functions

• Policy Operationalization: Drafts notifications, circulars, and administrative clarifications to enforce decisions approved by the GST Council.
• Tax Administration: Collects CGST and IGST, processes refund claims, handles audit assessments, and conducts anti-evasion operations.
• Anti-Evasion and Intelligence: Operates specialized investigative wings like the Directorate General of GST Intelligence (DGGI) to detect fake invoicing, fraudulent Input Tax Credit (ITC) claims, and tax suppression.
• Customs and IGST Integration: Manages border clearances and collects IGST on imported goods acting as customs authorities.

Goods and Services Tax Network (GSTN)

The Goods and Services Tax Network (GSTN) provides the non-government technological infrastructure linking taxpayers, central and state tax authorities, the RBI, and commercial banks.

Technical Mandate

• Handles taxpayer registration, invoice matching, filing of GSTR-1, GSTR-3B, and GSTR-9 returns, and processing of tax payments.
• Processes raw data for analytics, automated risk scoring, and generation of electronic waybills (e-Way bills) and e-invoices.
• Restructured into a 100% government-owned company, with equity shared equally between the Centre (50%) and States combined (50%).

Key Facts and Technical Data for Revision

• 101st Constitutional Amendment Act, 2016 provided the constitutional foundation for GST implementation.
• GST came into effect across India on July 1, 2017 (celebrated annually as GST Day).
• Jammu and Kashmir adopted GST legislation on July 8, 2017.
• Article 279A prescribes the constitution of the GST Council by the President of India within 60 days of the amendment’s commencement.
• Central Government holds a 33.33% vote weightage in the GST Council, while all State Governments collectively hold 66.67%.
• GST rates are structured into major tax slabs: 5%, 12%, 18%, and 28%, alongside special low rates for precious metals like gold (3%) and unworked diamonds (0.25%).
• GSTN converted into a fully government-owned entity after acquiring private shares previously held by financial institutions.
• Directorate General of GST Intelligence (DGGI) acts as the specialized intelligence agency under CBIC tasked with detecting tax evasion.
• Compensation Cess was instituted under the GST (Compensation to States) Act, 2017, to compensate states for revenue losses due to GST implementation for a five-year transition period.
• The Supreme Court in the Mohit Minerals case (2022) ruled that recommendations of the GST Council carry persuasive value rather than binding authority on state legislatures, upholding the principle of uncooperative federalism.