The Supreme Court’s judgement will not impact the functioning of the Goods and Services Tax, or GST, regime, the Union Finance Ministry said on Thursday, according to The Hindu.
Earlier on Thursday, a bench of Justices DY Chandrachud, Surya Kant and Vikram Nath held that the Union and state governments have equal powers in making laws related to GST. It also ruled that the Centre and state governments are not bound to follow the GST Council’s recommendations.
The bench passed the verdict while upholding a 2020 judgement of the Gujarat High Court that had quashed a central government notification that had levied a 5% Integrated Goods and Services Tax, or IGST, on transportation of imported goods through sea routes.
Responding to the verdict, the finance ministry said that the court only elaborated on the functional mechanism of the GST, and did not lay down anything new in that regard. It described the GST Council as “the finest example of collaborative and cooperative federalism”.
The GST Council made the recommendations with consensus between the Centre and the states, and there was only one instance when a decision of the council required voting, the finance ministry said.
“Even in this case, the dissenting States implemented the decision of GST Council,” the finance ministry added. “In all other instances, which run into more than a thousand, the decisions have been taken with consensus.”
Meanwhile, Tamil Nadu Finance Minister Palanivel Thiaga Rajan said that the Supreme Court’s judgement establishes the rights and powers of states, The New Indian Express reported. The tax regime has not yielded the results that were expected, he added.
In May 2021, Rajan had described the GST Council as a “constitutional oddity”.
“We have been highlighting that States would lose power because of GST,” he said. “What if the GST council decides on its own and makes a change to the tax portal before or after the recommendations are approved by the government? We have to pay because the portal won’t accept it otherwise.”