Part XII: Finance, Property, Contracts and Suits

Article 279A: Goods and Services Tax Council

Original Article:

(1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.

(2) The Goods and Services Tax Council shall consist of the following members, namely:—

• The Union Finance Minister — Chairperson;
• The Union Minister of State in charge of Revenue or Finance — Member;
• The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government — Members.

(3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council for such period as they may decide.

(4) The Goods and Services Tax Council shall make recommendations to the Union and the States on—

• The taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
• The goods and services that may be subjected to, or exempted from, the goods and services tax;
• Model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply;
• The threshold limit of turnover below which goods and services may be exempted from goods and services tax;
• The rates including floor rates with bands of goods and services tax;
• Any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
• Special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
• Any other matter relating to the goods and services tax, as the Council may decide.

(5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.

(7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.

(8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

(9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:—

• The vote of the Central Government shall have a weightage of one-third of the total votes cast, and
• The votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

(10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of—

• Any vacancy in, or any defect in, the constitution of the Council; or
• Any defect in the appointment of a person as a Member of the Council; or
• Any procedural irregularity of the Council not affecting the merits of the case.

(11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute—

• Between the Government of India and one or more States; or
• Between the Government of India and any State or States on one side and one or more other States on the other side; or
• Between two or more States, arising out of the recommendations of the Council or implementation thereof.

Explanations:

Article 279A of the Indian Constitution was introduced by the Constitution (One Hundred and First Amendment) Act, 2016, and established the Goods and Services Tax (GST) Council. This Council plays a crucial role in overseeing the implementation and regulation of the Goods and Services Tax across India. The GST Council serves as a federal forum, enabling the Union and State governments to collaboratively make decisions related to GST policies, rates, and exemptions, fostering a unified tax regime across the nation.

Clause-by-Clause Explanation:

Clause (1): Formation of GST Council

The President of India, within sixty days of the amendment's commencement, must constitute a Goods and Services Tax Council. This council is formed to harmonize GST across the country and coordinate tax policies.

Clause (2): Composition of the GST Council

The GST Council includes:

• The Union Finance Minister as Chairperson,
• The Union Minister of State for Revenue or Finance as a member,
• A Finance or Taxation Minister nominated by each State Government as members.

Clause (3): Vice-Chairperson Selection

State members of the Council may choose one among themselves to act as the Vice-Chairperson, thus ensuring equitable representation of states.

Clause (4): Advisory Role of the GST Council

The Council recommends various aspects, including:

• Taxes and surcharges to be integrated into GST,
• Goods and services to be included or excluded from GST,
• Model GST laws and principles for interstate supply,
• Threshold turnover for exemptions,
• Standard and special rates for goods and services, and

Clause (5): Date of Levy on Petroleum Products

The GST Council suggests the date for GST imposition on petroleum products, as they were initially excluded from GST purview.

Clause (6): Harmonization Principle

The Council is mandated to promote a harmonized tax structure and a unified national market.

Clause (7): Meeting Quorum

Meetings require half of the total council members to constitute a quorum, ensuring adequate representation in decision-making.

Clause (8): Procedural Authority

The Council defines its procedures, giving it flexibility to adapt operations as required.

Clause (9): Decision-Making Process

Decisions need a three-fourths majority of weighted votes. The central government holds a one-third weight, and the states together hold a two-thirds weight, maintaining a federal balance.

Clause (10): Validity of Proceedings

No proceedings are invalidated due to vacancies, appointment issues, or procedural errors unless they affect the case’s merits.

Clause (11): Dispute Resolution Mechanism

The Council has the authority to resolve disputes arising between the Central and State governments or among states related to Council recommendations.

Amendments:

The 101st Constitutional Amendment Act, 2016, introduced Article 279A, effective from September 12, 2016, establishing the GST Council.

Legislative History:

The legislative journey of Article 279A was marked by extensive deliberation. The amendment aimed to unify India’s indirect tax regime by introducing the Goods and Services Tax (GST). The GST Council was envisioned as a cooperative federal mechanism to facilitate consensus-based decision-making.

Frequently Asked Questions (FAQs):

References:

• "The Constitution of India" - Government Publications
• "GST Council Meetings and Outcomes" - Ministry of Finance
• Reports on the 101st Constitutional Amendment Act, 2016