GST Council

The GST bill seeks to set up a GST Council. The GST Council aims to develop a harmonized national market of goods and services. According the GST Bill, the President must constitute a GST Council within sixty days of this Act coming into force. The composition of the GST Council includes:

  • The Union Finance Minister (as Chairman),
  • 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 decisions of the GST Council will be made by three-fourth majority of the votes cast. The centre shall have one-third of the votes cast, and the states together shall have two-third of the votes cast.

The GST Council will make recommendations on:

  • taxes, cesses, and surcharges to be subsumed under the GST;
  • goods and services which may be subject to, or exempt from GST;
  • the threshold limit of turnover for application of GST;
  • rates of GST;
  • model GST laws, principles of levy, apportionment of IGST and principles related to place of supply;
  • special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand; and
  • other related matters.

The GST Council may decide the system of resolving disputes arising out of its recommendations. The GST Council will also decide when the GST would be levied on petroleum crude, natural gas, high speed diesel, aviation turbine fuel and motor spirit (petrol).

The Congress Party has opposed the composition of the council which gives the one-third weightage to the central government. It is demanding for the one-fourth of representation to the Central government. The Congress Party has also proposed for an independent dispute settlement mechanism.

GST and Issue of Dispute Resolution

The current GST bill seeks to entrust the power of dispute resolution to the GST Council, comprising the Centre and states, instead of an independent body like GST Dispute Settlement Authority as proposed in UPA government draft. A dispute redressal mechanism is needed as issues are bound to come up between states, or the Centre and states, or even with local bodies. The proposed GST Council as the dispute resolution body is criticised on the ground that how can it resolve the disputes arising out of its own recommendations.

The GST Council provides veto power to centre along with state governments. The GST Council will give the Centre one-third voting power and the states two-thirds. Any decision will need three-fourth of the votes. Thus, neither the states together nor the Centre alone can change the GST. However, the dispute resolution body cannot work on this principle.  Because any dispute resolution mechanism would need a judicial member. The authority was supposed to have a former Supreme Court judge or chief justice of a high court as its chairman. In GST Council each state, whether big such as Uttar Pradesh or Madhya Pradesh or small such as Uttarakhand or Chhattisgarh, will have the same voting percentage with it. The weak states may sometimes become orphan as they cannot woo the stronger states to support them.

Any dispute resolution mechanism whether it is independent or other way should resolve the issues in an amicable manner by giving due say to each of the parties to the dispute.

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