A bench headed by Justice DY Chandrachud said the recommendations of the GST Council were of persuasive value only as India is a cooperative federalism.
The Supreme Court ruled on Thursday May 19 that the recommendations of the Goods and Services Tax (GST) council are not binding on the Union government and the states, but have persuasive value because the country has a structure cooperative federal. A panel of Justices DY Chandrachud, Surya Kant and Vikram Nath also argued that the Union and state governments have concurrent powers to legislate the GST, but the council must work harmoniously to reach a workable solution.
The bench said that under Section 246A, Parliament and the state legislature have equal power to legislate in matters of taxation. Section 246A treats the Union and the State as equals and Section 279 of the constitution states that the Union and the State cannot act independently of each other, it said. -he declares. The high court said the recommendations of the GST council are the result of collaborative discussions between the Union and the states and that it is not imperative that one of the federal units has a higher share.
He said that Indian federalism is a dialogue between cooperative and non-cooperative federalism and that the Union of India and the States always engage in dialogue. The bench pointed out that there is no provision in the GST Act of 2017 that addresses the reluctance between Union-made and state-made laws and that it is up to the council to advise them appropriately each whenever such opportunities arise.
The Supreme Court’s decision came on a series of pleas as it upheld a Gujarat High Court verdict to void the levy of Integrated GST (IGST) on importers of reverse load sea freight. The High Court had held that no tax could be levied under the IGST on sea freight for services provided by a person in non-taxable territory by means of the carriage of goods by ship from a place in outside India to the customs post. in India. It had canceled the Union’s 2017 notification that a 5% IGST would be levied on freight transport services by ship.