In a significant verdict, the Supreme Court today ruled that recommendations of the GST Council aren’t binding on the Centre and States. It only has a persuasive value
A bench led by Justice DY Chandrachud held that the Central Government and States have simultaneous powers to legislate on Goods and Service Tax (GST).
Hence, the GST council must work in a harmonious manner to achieve a workable solution between the Centre and States, the top Court said.
“Recommendations of GST council are the product of collaborative discussion. It is not imperative that one of the federal units must always possess a higher share”, Justice Chandrachud read said.
It remains to be seen if this verdict would lead to a re-evaluation of past GST rulings.
“If some are re-evaluated now, it is going to become challenging for businesses which are just recovering from a pandemic and demand reduction. This is a stage where the tax policies and tax laws should be supporting businesses to grow back to their earlier double-digit growth figures,” said MS Mani, Partner, Deloitte India (Indirect Tax).
The GST council is the supreme decision-making body chaired by FM and represented by all states/UTs by their finance ministers