Supreme Court verdict has no bearing on operation of GST Board: Center


CS judgment on GST Board will not affect existing framework: Center

After the Supreme Court ruled that the recommendations of the GST Council were not binding on the Center and the States, government sources said on Thursday that the judgment had no bearing on the functioning of the GST in India nor did not establish anything fundamentally different from the existing framework.

“The Tribunal de Grande Instance has only developed this mechanism by making its observations. This judgment does not bring any novelty with regard to the institutional mechanism of the GST, has no bearing on the way in which the GST has functioned in India, nor does it provide for anything fundamentally different from the existing GST framework,” the sources said.

The Supreme Court declared that the Central and State legislatures have equal powers to legislate on the GST while upholding the judgment of the Gujarat High Court in the sea freight case in the Mohit Minerals case.

It is therefore amply clear that the Superior Court elaborated on the constitutional scheme regarding the GST.

As provided in Section 279A, the Board makes recommendations to the Union and the States on model GST law, principles of levy, allocation of GST levies on interstate deliveries, principles relating to place of delivery, GST rates and special provisions for certain states.

The Center and the States implement these Council recommendations through normal legislative processes under their respective laws.

Central and state laws also specifically provide that levies, exemptions, rules, etc., would be prescribed on the recommendation of the Board through subordinate legislation, the sources said.

The government sources further indicated that the GST has been working on this institutional consensus collaboration mechanism.

“There was only one isolated instance where the Board took a decision by vote, and even then, dissenting states implemented the decision of the TPS Board. Decisions were made by consensus. It was the finest example of collaboration and cooperative federalism,” the sources added.

With respect to the specific issue raised in the Sea Freight Tax case, the tribunal observed that since the Indian importer is liable to pay IGST on the “composite supply”, comprising the supply of goods and the provision of transportation services, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the “provision of services” by the shipping company would violate Article 8 of the CGST Act.


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