{"id":1480,"date":"2026-07-07T13:28:44","date_gmt":"2026-07-07T13:28:44","guid":{"rendered":"https:\/\/theleagle.in\/?p=1480"},"modified":"2026-07-07T13:28:45","modified_gmt":"2026-07-07T13:28:45","slug":"notifications-cannot-go-beyond-recommendations-of-the-gst-council","status":"publish","type":"post","link":"https:\/\/theleagle.in\/?p=1480","title":{"rendered":"Notifications Cannot Go Beyond Recommendations of the GST Council"},"content":{"rendered":"
<\/div>\n

Madurai Bench of the Madras High Court in M\/S Guru and Co v Union of India<\/a> (\u2018M\/S Guru case\u2019) addressed question about the Union of India\u2019s powers to issue notifications vis-\u00e0-vis the GST Council recommendations. And held that the former cannot go beyond the latter\u2019s scope. The High Court also held that the GST Council cannot ratify a notification. The latter observation is in accordance with previous decisions which have similarly held that the GST Council does not possess the power to ratify. This article examines the M\/S Guru case and  its contribution to our understanding of the GST Council\u2019s powers.     <\/p>\n\n\n\n

Brief Facts <\/strong><\/p>\n\n\n\n

The writ petitioners were suppliers of pulses, but their brand names were not registered under the Trademark Act,1999. Under Notification No.1\/2017 read with Notification No.2\/2017 and the Corrigendum, intra-State supply of following goods was exempt from GST: <\/p>\n\n\n\n

Dried leguminous vegetables, shelled, whether or not skinned or split (other than put up in unit container and bearing a registered brand name).  <\/em><\/p>\n\n\n\n

Since the writ petitioners were dealing in goods that did not carry a registered brand name, they were not liable to GST. Subsequently, the Ministry of Finance realised that a substantial volume of trade transactions fell outside the net as a result of the above tax exemption. Various traders had deregistered their brand names but continued to supply pulses and other products to avoid payment of GST. The Ministry of Finance amended the notifications to address the tax avoidance. The result was that following goods were included in the next tax. Goods, <\/p>\n\n\n\n

bearing a brand name on which an actionable claim or<\/em> enforceable right in a court of law is available [other than those where any<\/em> actionable claim or any enforceable right in respect of such brand name has<\/em> been voluntarily foregone, subject to the conditions as in the ANNEXURE]\u201d,<\/em><\/p>\n\n\n\n

Based on the amendments, show cause notices were issued to the writ petitioners requiring them to explain why they should not be held liable to pay GST. <\/p>\n\n\n\n

The writ petitioners approached the Madras High Court seeking to declare the aforesaid notifications as ultra vires of Article 279A of the Constitution. And accordingly declare that the show cause notices were null and void. <\/p>\n\n\n\n

Relevant Provisions <\/strong><\/p>\n\n\n\n

Section 9 of CGST Act, 2017 states that GST shall be levied on all intra-State supplies of goods or services or both \u2018as may be notified by the Government on the recommendations of the Council\u2019. And Section 11(1) of CGST Act, 2017 states that: <\/p>\n\n\n\n

Where the Government is satisfied<\/em> that it is necessary in the public interest so to do, it may, on the<\/em> recommendations of the Council, by notification, exempt generally, either<\/em> absolutely or subject to such conditions as may be specified therein, goods or<\/em> services or both of any specified description from the whole or any part of the<\/em> tax leviable thereon with effect from such date as may be specified in such<\/em> notification.<\/em><\/p>\n\n\n\n

Reading Section 9 with Section 11, it was obvious that under both the provisions notification issued by the Union of India should be preceded by recommendations of the GST Council. <\/p>\n\n\n\n

The GST Council\u2019s Recommendations <\/strong><\/p>\n\n\n\n

The Madras High Court combed through relevant part of the GST Council\u2019s recommendations. Minutes of the GST Council meetings revealed that the notifications intended to address the issue of tax avoidance. Due to the tax exemption, various traders deregistered their brand names but continued to trade under their brand names and there was a need to address the revenue leakage. As per the minutes of relevant meetings, the GST Council approved the following addition to tackle tax avoidance: <\/p>\n\n\n\n

a fourth condition could also be added namely, a mark or name<\/u><\/em> in respect of which actionable claim is available shall be deemed to<\/em> be a registered brand name<\/em>. The Council approved this proposal. <\/em>(emphasis added)<\/p>\n\n\n\n

The Madras High Court compared the bare text of the GST Council\u2019s recommendations and the amendment to the notification based on the recommendations and observed that: <\/p>\n\n\n\n

\u2026 there has been an addition of the words \u201cenforceable right in a court of law\u201d along with the Annexure that lays down the procedure for voluntarily forgoing an actionable claim or an enforceable right. <\/em>(para 90)<\/p>\n\n\n\n

The Madras High Court held that the phrase \u2018enforceable right in a court of law\u2019 was of wide ambit. While actionable claims may be enforceable rights the vice-versa may not be true. The addition of above phrase meant that the Union of India had gone above and beyond what was recommended by the GST Council. And since the same notifications were adopted by State Governments, both the Union and States had went beyond the recommendations of the GST Council.  <\/p>\n\n\n\n

The GST Council\u2019s Ratification of Notifications <\/strong><\/p>\n\n\n\n

The State\u2019s counsel highlighted that the GST Council had ratified the Notifications in a subsequent meeting. The Madras High Court then examined if the GST Council possessed the power to ratify notifications with retrospective effect and answered in the negative. The High Court relied on two factors: <\/p>\n\n\n\n

Firstly, in M\/S Brunda Infra Pvt Infra Ltd v The Additional Commissioner of Central Tax<\/a>, the Telangana High Court while examining the validity of a notification issued with prior recommendation of the GST Council observed that: <\/p>\n\n\n\n

The Implementation Committee\/Law Committee is neither a constitutional nor a statutory body. It is an in-house creation of GST Council for convenience to run the administration. The decision taken by Implementation Committee\/Law Committee, on which Notification No.56\/2023 is based, cannot be said to be the decision of GST Council. The ratification of such legislative action is unknown to law<\/em>. (para 97)<\/p>\n\n\n\n

Relying on above observations of the Telangana High Court, the Madras High Court held that the GST Council\u2019s ratification cannot be equated to a recommendation, and a \u2018ratification\u2019 cannot provide life to a notification. <\/p>\n\n\n\n

Secondly, the Madras High Court held that any authority \u2013 created under the Constitution or a statute \u2013 can only exercise powers conferred on it expressly or by implication. And such authorities do not have any inherent power. And concluded that: <\/p>\n\n\n\n

Neither the Constitution nor any statute has invested the GST Council with the power of ratification. We, therefore, hold that ratification made by the GST Council in 22nd<\/sup> meeting is without jurisdiction<\/em>. (para 19) <\/p>\n\n\n\n

Negativing not only the ratification of amended notifications but also clearly holding that the GST Council had no powers of ratification. <\/p>\n\n\n\n

Broader Significance and Impact of the Judgment <\/strong><\/p>\n\n\n\n

The issue of legal value of recommendations of the GST Council was elaborately dealt by the Supreme Court in Union of India v Mohit Minerals Pvt Ltd<\/a> (\u2018Mohit Minerals case\u2019). In Mohit Minerals case, the Union of India had argued that the GST Council\u2019s recommendations were binding on the Union and States. The Supreme Court held that the GST Council\u2019s recommendations were only persuasive in nature, but where the government in exercising its rule-making powers it is bound by recommendations of the GST Council. <\/p>\n\n\n\n

The Madras High Court in the impugned case held that in so far as the GST laws are concerned, \u2018rules issued under Section 164 and statutory notifications issued under Sections 9 and 11 are on the same pedestal.\u2019 Thus, the government is bound by the GST Council\u2019s recommendations in so far as rule making or issuance of notifications are concerned. Typically, rule-making powers are exercised by the government under Section 164 of CGST Act, 2017 while notifications can be issued under various provisions which provide the government such powers. The Madras High Court placed rules and notifications under the single umbrella of secondary legislation and extended the ratio of Mohit Minerals case to government\u2019s power to issue notifications. Thus, holding that in issuing notifications the government is bound by the GST Council\u2019s recommendations and cannot go beyond them. Or if notifications are being issued under Section 9 or Section 11 of the CGST Act, 2017 then they need to be mandatorily preceded by the GST Council\u2019s recommendations.  <\/p>\n\n\n\n

The issue of legal value of the GST Council\u2019s recommendations was also addressed in a previous case by the Madras High Court in Ms Tata Play Limited v Union of India<\/a> (\u2018Tata Play case\u2019) where it interpreted Section 168A, CGST Act, 2017 where government has the power to extend time limits for various GST compliances, but on recommendations of the GST Council. The Madras High Court held that while recommendations of the GST Council under Section 168A were mandatory, they were not binding in that the government can choose to not act on the recommendations. And also clarified that subsequent ratification of a notification by the GST Council \u2018would not constitute compliance with the mandate\u2019 contained in Section 168A, CGST Act, 2017. <\/p>\n\n\n\n

The Madras High Court in M\/S Guru case case has reinforced the previous jurisprudence about binding nature of the GST Council\u2019s recommendations in relation to secondary legislation. And observations in M\/S Guru case also align with the ratio of Tata Play case. The law, for now, is clear: a notification should be preceded by the GST Council\u2019s recommendation. And even if the GST Council made a recommendation, that notification is only valid to the extent it aligns with the said recommendation. Any additions in the notification(s) are ultra vires. <\/p>\n\n\n\n

One major reason for insistence on adhering to the GST Council\u2019s recommendation is that it is a forum for co-operative federalism as envisaged under Article 279A of the Constitution. The Union and States arrive at a decision and recommend it to the Union of India and State Governments collectively. A decision is taken by an in-house or sub-committee of the GST Council or by an executive cannot be equated to the GST Council since it does not contain all representatives of the Union and States. Additionally, if the government issues a notification or enacts a rule that goes beyond the GST Council\u2019s recommendation it is not exercising as per law since it is bound by the recommendations. And, on principle, it violates co-operative federal character of the GST Council if either the Union of India or any State Government unilaterally amends scope of the recommendations. <\/p>\n\n\n\n

The final word on the GST Council\u2019s power is yet to be spoken and its likely to a live issue in the foreseeable future. But some contours of the scope and legal value of the GST Council\u2019s decisions have been concretised through repeated judgments. Hopefully, future judicial decisions will only add more coherence and certainty to the existing jurisprudence.        <\/p>\n","protected":false},"excerpt":{"rendered":"

Madurai Bench of the Madras High Court in M\/S Guru and Co v Union of India (\u2018M\/S Guru case\u2019) addressed question about the Union of India\u2019s powers to issue notifications vis-\u00e0-vis the GST Council recommendations. And held that the former cannot go beyond the latter\u2019s scope. The High Court also held that the GST Council cannot ratify … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_themeisle_gutenberg_block_has_review":false,"cybocfi_hide_featured_image":"","footnotes":""},"categories":[137],"tags":[45,155,12,41,111,385,384,94,382],"class_list":["post-1480","post","type-post","status-publish","format-standard","hentry","category-there-are-two-certainties-in-life-taxes-and-complaints-about-taxes","tag-article-279a","tag-constitution","tag-gst","tag-gst-council","tag-madras-high-court","tag-mohit-minerals-case","tag-ratification","tag-ravpratapsingh","tag-recommendations"],"yoast_head":"\nNotifications Cannot Go Beyond Recommendations of the GST Council - TheLeagle | Eco Law Forum<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/theleagle.in\/?p=1480\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Notifications Cannot Go Beyond Recommendations of the GST Council - TheLeagle | Eco Law Forum\" \/>\n<meta property=\"og:description\" content=\"Madurai Bench of the Madras High Court in M\/S Guru and Co v Union of India (\u2018M\/S Guru case\u2019) addressed question about the Union of India\u2019s powers to issue notifications vis-\u00e0-vis the GST Council recommendations. 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