GST Council

With no positive information on convening the Special Session to pass the GST Constitution Amendment Bill in the Rajya Sabha we thought it appropriate share some thoughts on the issues relating to the proposed GST Council in the dissent notes submitted to the Select Committee.

GST Council is constituted with 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, nominated by each state government. The Members shall choose a Vice Chairman from amongst themselves.

GST Council is proposed as a statutory body empowered to make recommendation on almost all issues relevant to the smooth implementation of GST.

	(i)	Taxes, cesses, and surcharges that are levied by the Central Government and States that are to be subsumed in the GST
	(ii)	Goods / Services that would be covered / exempted from GST
	(iii)	Model of CGST / SGST and IGST legislation
	(iv)	Apportionment of IGST between the Centre and the States
	(v)	Determination of Place of supply
	(vi)	Threshold limit of turnover below which GST is exempt
	(vii)	Rates / Floor rates band
	(viii)	Special rates to raise additional resources during any natural calamity;
	(ix)	Special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand;

GST Council would also decide when GST would be levied on petroleum products initially kept out of GST.

The GST council is vested with powers to regulate all aspects relating to GST, though the roll is only recommendatory.

The GST Council may also decide upon the modalities for the resolution of disputes arising out of its recommendations.

Every decision of the GST Council would be taken at a meeting, by a majority of not less than three-fourth of the 'weighted votes of the members present and voting', wherein the Central Government would have the weightage of one third of the total vote cast and the State Governments would have a weightage of two-third of the total votes cast.

The manner of calculation of weighted votes of the members present and voting is stated in the Statement of objects and reasons of the Bill.

1.The Congress Party is of the view that the GST Council is unduly weighted in favour of the Centre and that in the interest of true cooperative federalism the share of the states in voting in the GST Council must be enhanced to 75 per cent and share of centre brought down to 25 per cent - (Source: http://pchidambaram.in/across-the-aisle-an-open-letter-in-reply-to-the-finance-minister/)

2. An independent dispute resolution authority should be setup as settlement of disputes is a judicial function and there must be an independent body that will resolve disputes relating to GST.

We do not see merit in the suggestion for bringing down the voting power of the Central Government from 1/3rd to 25% as every decision of the GST Council would be taken at a meeting, by a majority of not less than 3/4th of the 'weighted votes of the members present and voting'.

As per the voting pattern the centre alone or the States together cannot have any veto power.

As regards dispute settlement mechanism, the proposal in 2011 the Constitution Amendment Bill was for setting up a Dispute Redressal Tribunal. This was rejected by the Standing Committee and the Empowered Committee of the State Finance Ministers. It was observed that the authority would have overriding powers over Parliament and state legislatures, and must be omitted .

Further the present Bill does not state that the dispute would be adjudicated by the GST Council but has only provided that the GST Council may decide upon the modalities for the resolution of disputes arising out of its recommendations. The modalities hopefully would be for setting up of an independent judicial body to address any dispute between either the States or with the Central Government.