{"id":1536,"date":"2026-10-12T05:39:58","date_gmt":"2026-10-12T05:39:58","guid":{"rendered":"https:\/\/theleagle.in\/?p=1536"},"modified":"2026-10-12T05:39:59","modified_gmt":"2026-10-12T05:39:59","slug":"a-decade-of-the-gst-council-snapshot","status":"publish","type":"post","link":"https:\/\/theleagle.in\/?p=1536","title":{"rendered":"A Decade of the GST Council: Snapshot \u00a0\u00a0"},"content":{"rendered":"<div id=\"bsf_rt_marker\"><\/div>\n<p>Almost a decade ago \u2013 22\/23 September 2016 &#8211; the Goods and Services Tax Council (\u2018GST Council\u2019) held its first meeting in New Delhi. The GST Council was envisaged as the apex policy making body for GST. Despite the GST Council\u2019s central importance to GST, many aspects of its design and working remain under examined. For example, the voting weightage accorded to the Union and States, the absence of a permanent dispute settlement body, and of late, the rarity of its meetings. This article uses the GST Council\u2019s decade-old existence as an opportunity to comment on its journey.&nbsp;<\/p>\n\n\n\n<p>In this article, I highlight ten issues relating to the GST Council and divide them into four groups: (i) structural issues; (ii) evolution of jurisprudence; (iii) some of its questionable decisions; and (iv) the final and unconquered frontier of bringing petrol\/diesel within the GST\u2019s domain.<\/p>\n\n\n\n<p>Some of the observations in this article are derived from Report of the High-Level Committee on Union-State Relations. Part I of the report was released in February 2026 and is available&nbsp;<a href=\"https:\/\/hlcusr.tn.gov.in\/#\/home\">here<\/a>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>I. Structural Issues&nbsp;<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><em><u>Ad Hoc Dispute Settlement Mechanism<\/u><\/em>: Article 279A(11) of the Constitution states that the GST Council shall establish a mechanism to adjudicate any dispute \u2018arising out of the recommendations of the Council or implementation thereof.\u2019\u00a0\u00a0The above provision creates a perception of bias since it empowers the GST Council to establish a dispute resolution mechanism for disputes that may arise from its own recommendations. When the above provision was proposed, the Union of India defended it by arguing that the GST Council is only empowered to determine the modalities of dispute resolution and will not actually adjudicate the dispute. The Union of India highlighted a crucial distinction; but the distinction overlooks that the GST Council possesses the discretion to not constitute the dispute settlement body at all. And that the GST Council also possesses power to select and appoint members of the body, creating an unavoidable perception of bias.\u00a0<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Voting Weightage in the GST Council<\/u><\/em>: The imperfect design of the GST Council gets further reinforced if we examine voting weightage in the GST Council: (i) the Union\u2019s vote has a weightage of one-third of total votes cast; (ii) all states taken together have a weightage of two-thirds of total votes cast. Because as per Article 279A(9) of the Constitution, no decision of the GST Council can be taken by less than three-fourths of weighted votes of member present and voting, the Union enjoys a de facto veto in the GST Council decisions. Thus, if the Union and various states disagree on a certain recommendation or its implementation, or there is a dispute, the former can decide not to vote in favor of constituting a dispute settlement body. Leaving the disagreeing states with no option to resolve the dispute except for approaching the Supreme Court. Also, the \u2018two-thirds weightage of all states together\u2019 is split equally amongst all the states. Thus, a state with a larger GST base possesses equal voting powers as a state with a smaller GST base. Providing equal weight to votes of all states creates superficial equality and disadvantages states with a bigger stake in GST policies.\u00a0\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Lack of Permanent Secretariat<\/u><\/em>: The GST Council is a vital constitutional body and should ideally shape the GST policy. But even after a decade, the GST Council has no permanent secretariat practically functions as an appendage of the Union of India instead of a bipartisan constitutional body. Equally, the various committees such as the Fitment Committee, Law Committee, etc. lack adequate secretarial support, operate in an ad hoc manner, and\u00a0<a href=\"https:\/\/indiankanoon.org\/doc\/140786662\/\">lack a clear legal foundation<\/a>. A constitutional body that is supposed to be a forum for \u2018co-operative federalism\u2019, must have a permanent secretariat with proportional representation from states in administration and support functions. The scheduling of meetings in different cities of India \u2013 to avoid the impression of the GST Council being a \u2018Delhi-centric\u2019 body &#8211; does not detract from the fact that its administrative support and control is anchored in the Union of India\u2019s Ministry of Finance.\u00a0\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<p><strong>II. Evolution of Jurisprudence&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Non-Binding Recommendations<\/u><\/em>: In\u00a0<a href=\"https:\/\/indiankanoon.org\/doc\/98511521\/\">Union of India v M\/S Mohit Minerals Pvt Ltd<\/a>, the Supreme Court held that the GST Council\u2019s recommendations have a persuasive value and are not binding on the Parliament and State Legislatures. As\u00a0<a href=\"https:\/\/theleagle.in\/?p=276\">I\u2019ve argued previously<\/a>, this was the correct view. The GST Council cannot, and should not, be able to mandate the Parliament to enact GST laws or amend it. The GST Council can only recommend legislative action, and its recommendations should be treated akin to the opinion of an expert body. The Parliament and State Legislatures decision can align with the GST Council\u2019s recommendations but their sovereign powers to enact legislation cannot be beholden to the GST Council\u2019s view. Else it amounts to delegating the Parliament and State Legislatures power to enact\/amend GST laws to the GST Council. And while the anxiety of states \u2018going their own way\u2019 is valid, it needs to be understood that state autonomy is part of GST\u2019s legal design.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Binding Recommendations<\/u><\/em>: In Mohit Minerals case, the Supreme Court created one exception. The GST Council\u2019s recommendations on GST rates. To preserve the uniformity in GST rates across various states, the Supreme Court did not grant states the freedom to notify their own tax rates that were contrary to or in deviation of the GST Council\u2019s recommendations. The Supreme Court in justifying the view that recommendations on tax rates are binding focused on the nationwide uniformity of GST. And that in various provisions of the IGST Act, 2017, the pre-condition for notification of GST rates is a recommendation from the GST Council. The binding power of the GST Council\u2019s recommendations on tax rates also emerges from the fact notification of tax rates is delegated to the executive and is not an exercise of legislative power. Thus, to the extent of tax rates the state autonomy is restricted and cannot traverse beyond the GST Council\u2019s recommendations.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>No Power to Ratify<\/u><\/em>: Section 9 and Section 11 of the CGST Act, 2017 empower the Union of India to levy GST on supply of various goods or services or exempt them \u2018on the recommendations of the Council\u2019.\u00a0<a href=\"https:\/\/theleagle.in\/?p=1480\">Courts have clarified<\/a>\u00a0two legal aspects in respect of the above: (i) notifications issued under the above provisions cannot go beyond the GST Council\u2019s recommendations; (ii) the GST Council cannot subsequently ratify a notification if it goes beyond its recommendation. Courts have stated that a ratification cannot be equated to a recommendation. And more crucially, a constitutional body like the GST Council only possesses powers that are conferred on it expressly or impliedly. And the GST Council\u00a0has not been\u00a0conferred powers of ratification.\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<p><strong>III. Some Questionable Decisions&nbsp;<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Retraction of the GST Compensation Cess Promise:\u00a0<\/u><\/em>The \u2018Grand Bargain\u2019 of GST was founded on various pillars, one crucial pillar being the GST Compensation Cess. Pithily put, it was a constitutional promise by the Union to compensate states for shortfall below 14% annual growth in GST revenues for the first five years beginning from 2017. The Union promised to compensate States largely through the money raised under an independent levy: the GST Compensation Cess. The COVID-19 induced slowdown reduced the GST Compensation Cess collections and thereafter the Union of India declined to cover the shortfall. States protested and argued that the promise to pay for shortfall wasn\u2019t contingent on the Union collecting sufficient revenues. Eventually, the matter was resolved through states borrowing money from the RBI which the Union repaid. The Union citing COVID-19 as an \u2018Act of God\u2019 and trying to retract from a constitutional promise was not only constitutional bad faith but showed that a constitutional obligation was treated as dispensable and transactional. A few more similar instances and the Union-State \u2018grand bargain\u2019 that undergirds GST may start seeing visible cracks.\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Valuation on Gambling<\/u><\/em>:\u00a0\u00a0The online gambling sector in India is dead. The GST Council recommended its death. The Supreme Court approved it. The GST Council\u2019s recommendations on amendment of gambling-related amendments had three dimensions: (a) including online money gaming within GST\u2019s scope irrespective of whether they are games of skill or games of chance; (b) valuation for GST\u2019s purpose was the entire pot of money and not merely the commission earned by the online intermediary; (c) a tacit approval of implementing the amended provisions retrospectively, going back seven years. The Revenue Department labelled the amendments and changes as \u2018clarificatory\u2019, and the Supreme Court in a questionable judgment approved all aspects of the amendment. The fault lies in our revenue hungry, gambling-averse ecosystem; but, in this case the GST Council was remiss in not understanding that the revenue being demanded will never be realized. And if it did understand it, it was remiss in not stating its aim in plain terms and instead slyly facilitating a de facto online gambling ban.\u00a0\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li><em><u>Change in Tax Rates<\/u><\/em>: The Prime Minister as part of the Independence Day speech in August 2025 announced change in GST tax rates. It wasn\u2019t a simple change in GST tax rates, the tax slabs were simplified and reduced to three: 5%, 18%, and 40%. Though most commentators, especially the Union of India, miscounted them and announced that it was a dual rate structure. The GST Council convened a few weeks after the Prime Minister\u2019s speech and approved the change in tax rates. A deliberative body which is supposed to the site of co-operative federalism practically became a rubber stamp for the Union of India\u2019s decision. In one stroke, any pretense of bipartisanship, deliberate decision making, or the fa\u00e7ade of expertise was sacrificed to align with the executive\u2019s pre-determined policy decision. No wonder, in the past three years the GST Council has met only thrice. The GST policy is increasingly being determined by the Union of India\u2019s executive branch, with little to no meaningful participation from states.\u00a0\u00a0<\/li>\n<\/ul>\n\n\n\n<p><strong>IV. The Unconquered (and Unconquerable?) Territory&nbsp;<\/strong><\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><em><u>VAT on Alcohol and Fossil Fuels<\/u><\/em>: VAT on alcohol and fossil fuels \u2013 petrol and diesel \u2013 are two crucial revenue sources for states. Levy of state-based sales tax on consumption of both these items remains a source of discomfort for many who view the current scope of GST as limited. The \u2018One Nation, One Tax\u2019 dream remains unfulfilled until state-level indirect taxes such as VAT continue to exist alongside GST. In my view, alcohol and fossil fuels are unconquerable territories for the GST Council. At least, in the foreseeable future. The reason is that the current GST Council\u2019s design heavily favors the Union of India and the GST Council is increasingly deviating from its role as a forum for co-operative federalism. Instead, it is functioning as an appendage of the Union of India giving states little to no reason to further sacrifice their fiscal autonomy. The Union of India frequently frames the issue relating to VAT on alcohol and fossil fuels as \u2018states don\u2019t agree\u2019. The flipside is that the Union also benefits by levying its own taxes \u2013 excise and cess \u2013 on petrol and diesel. Thereby leaving the issue of VAT on alcohol and fossil fuels \u2018unresolved\u2019 for the time being. Unless of course, political logic and arm twisting ensures the grand bargain of GST becomes \u2018grander\u2019. But it will mostly favour the Union.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0<\/li>\n<\/ol>\n\n\n\n<p><strong>Conclusion&nbsp;<\/strong><\/p>\n\n\n\n<p>The GST Council is a crucial body and responsible for shepherding the GST. However, its design and manner of operation does not inspire much confidence that it is truly a site for \u2018co-operative federalism\u2019. Neither are states asserting their rights or making their voices heard on crucial issues. For example, in September 2025, no state raised a meaningful objection about the way the GST Council was presented with a fait accompli to recommend and approve the three tax rates. Unless the states create a compelling and urgent reason, the GST Council is likely to continue meandering on its current path.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Almost a decade ago \u2013 22\/23 September 2016 &#8211; the Goods and Services Tax Council (\u2018GST Council\u2019) held its first meeting in New Delhi. The GST Council was envisaged as the apex policy making body for GST. Despite the GST Council\u2019s central importance to GST, many aspects of its design and working remain under examined. [&hellip;]<\/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":[12,41,94],"class_list":["post-1536","post","type-post","status-publish","format-standard","hentry","category-there-are-two-certainties-in-life-taxes-and-complaints-about-taxes","tag-gst","tag-gst-council","tag-ravpratapsingh"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.1 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>A Decade of the GST Council: Snapshot \u00a0\u00a0 - 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=1536\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"A Decade of the GST Council: Snapshot \u00a0\u00a0 - TheLeagle | Eco Law Forum\" \/>\n<meta property=\"og:description\" content=\"Almost a decade ago \u2013 22\/23 September 2016 &#8211; the Goods and Services Tax Council (\u2018GST Council\u2019) held its first meeting in New Delhi. The GST Council was envisaged as the apex policy making body for GST. Despite the GST Council\u2019s central importance to GST, many aspects of its design and working remain under examined. 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