After a much awaited time period, now its matter of time, when GST is going to be a reality in India. The seriousness of the Government to implement GST, clearly appears from the passage of 122nd Constitutional Amendment Bill (“Constitutional Amendment Bill”) by both the houses of parliament i.e. Rajya Sabha as well as Lok Sabha. On the other hand, the States are also equally eager to implement GST as early as possible, and after the passage of Constitutional Amendment Bill, States are ratifying the same by holding the special sessions of their State legislative assemblies, and till now Assam, Bihar, Jharkhand, Himachal Pradesh, Chattisgarh has already ratified the Constitutional Amendment Bill. Therefore, we should not hessitate to appreciate the efforts of both Central Government and State Governments to implement the GST from April 1, 2017.
However, once the Constitutional Amendment Bill ratified by at least 50% States and assent is given by the Hon’ble President, after that the most important work before the Government would be, setting up of GST Council.
As per Article 279A of the Constitution of India, the President shall setup GST Council within 60 days of the commencement of 122nd Constitutional Amendment Act, 2014. GST Council may prove to be most powerful federal forum in years to come.
Nature of GST Council: The nature of GST Council will be quasi-legislative-cum-administrative body, as it will perform the legislative function delegated by the parliament to it and will also the perform the administrative function. It will be a constitutional body, since it draw its power from the Constitution of India. The GST Council will be a recommendatory body, in other words the decision taken by the GST Council will not be binding on the Central Government or State Governments. However, since it comprises of big political guns from the Centre as well as from the States i.e. the Finance Minister of the Centre and the Finance Ministers of the States, so it will not be easy for the Centre or the States to ignore its recommendations without any strong reason.
Composition of GST Council: The GST Council shall consists of following members:
Union Finance minister, who will be Chairperson of GST Council;
Union minister of State incharge of Revenue or Finance;
The minister incharge of Finance or Taxation or any other minister nominated by each State Government and they will choose one among themselves to be the vice chairperson of the council for a particular period.
Subject matters on which recommendations will be made by GST Council:
The GST Council shall make the recommendations to the Union and the States on the following subjects:
GST rates, cesses and surcharges levied by the Union, States and Local bodies which may be subsumed in the GST;
Goods and Services exempted from GST;
Model GST Law which is put on public domain on June 14, 2016, will be analysed clause by clause;
The apportionment of Integrated Goods and Services Tax (“IGST”), the principles that govern the place of supply and the principles of levy;
Threshold limit of turnover below which goods and services may be exempted from GST;
Special provisions with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttrakhand;
Prescribe the detailed procedure for conduct of its own business;
Recommend the date from which the GST would be levied on petroleum crude, high speed diesel, motor spirit (Commonly known as Petrol), natural gas and aviation turbine fuel; and
Any other matter relating to GST, as the council may decide.
Quorum for conducting meeting: At least 50% of the total number of members of GST Council should be present to conduct a meeting.
Voting Composition in GST Council:
The Central Government shall have a weightage of 1/3rd of total votes cast.
The State Governments taken together shall have a weightage of 2/3rd of total votes cast.
Approval of any decision by the GST Council: In GST Council, every decision shall be taken, when it is approved by at least 75% of the weighted votes of members present and voting.
From the above voting pattern, it appears that it will not be possible for the States to take any decision against the will of Centre, since the Centre has 33% votes and to get any decision passed, 75% votes are required, which is possible only when centre supports that particular decision. In the similar way Centre cannot take any decision which is opposed by States.
Challenges before GST Council: The GST Council has to face challenges while taking the given below decisions:
Computation of compensation in lieu of revenue loss to the States, since losses are going to be notional in nature, so it becomes important to laid down a transparent and detailed method to calculate the compensation, which is to be provided to States for initial five years;
Finalisation of common list of exempted goods and/or services, since every States has priority for its own goods and services having local importance, to which they wants to promote by providing exemption;
Determining the Revenue Neutral Rate (“RNR”), since many important things will depend upon RNR viz. GST rate structure, impact of GST on inflation, GST compliance etc.
Prescribing the machinery e.g Tribunal, to resolve the disputes of different kinds, but to resolve the disputes between Centre and States or among States, the apex court has the original jurisdiction as per Article 131 of the Constitution of India, so setting up of any parallel machinery to resolve the given disputes, that machinery may be held to be unconstitutional by the apex court.
There will be many more challenges, which will be come into picture once the GST Council start its work, but as we all know there is always a solution for every problem and we hope that GST Council will be able to find constructive solutions for such problems arises before it and will make the GST a successful experiment in India.