Recommendations of the 42nd GST Council Meeting

Context: The 42nd GST Council met under the Chairmanship of Union Finance Minister.

Analysis

  • The GST Council recommended the extension of Compensation Cess beyond the transition period of five years i.e. beyond June, 2022, for such period as may be required to meet the revenue gap.
  • To encourage domestic launching of satellites particularly by young start-ups, the satellite launch services supplied by ISRO, Antrix Corporation Ltd. and NSIL would be exempted.

Goods & Services Tax Council {GST Council}

  • The GST Council has been created in September 2016 under Article 279-A of the Constitution of India.
  • The main objective of GST is to develop a harmonized national market of goods and services.
  • It has its Secretariat office in New Delhi.

Composition of GST Council

GST Council is a federal forum with both centre and states in India on board. It is made of:

  1. The Union Finance Minister (as Chairman),
  2. The Union Minister of State in charge of Revenue or Finance, and
  3. The Minister in charge of Finance or Taxation or any other Minister, nominated by each state government.
  4. The Secretary (Revenue) will be appointed as the Ex-officio Secretary to the GST Council.
  5. The Chairperson, Central Board of Excise and Customs (CBEC), will be included as a permanent invitee (non-voting) to all proceedings of the GST Council.
  • The decisions of the GST Council are made by three-fourth majority of the votes cast.
  • The centre has one-third of the votes cast, and the states together have two-third of the votes cast.
  • Each state has one vote, irrespective of its size or population.
  • One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
  • 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.

Functions of GST Council

  • Taxes, cesses, and surcharges to be subsumed under the GST;
  • Goods and services which may be subject to, or exempt from GST;
  • The threshold limit of turnover for application of GST;
  • Rates of GST;
  • Model GST laws, principles of levy, apportionment of IGST (Integrated Goods and Service Tax) and principles related to place of supply;
  • Special provisions with respect to the eight north eastern states, Himachal Pradesh, Jammu and Kashmir, and Uttarakhand.

Disputes Resolution Mechanism

  • The decisions of the Council are defined as ‘recommendations’, they are not binding on the States.
  • Clause 11 of Article 279A mentions that the GST Council shall establish a mechanism to adjudicate any dispute arising out of the recommendations of the Council or its implementation. Thereby it is providing for a dispute settlement mechanism to be constituted by the GST Council.
  • So, the question here is if the Councils decisions are advisory in nature then why the need of a dispute settlement mechanism.

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