The Supreme Court's judgment on Thursday in Union of India versus M/s Mohit Minerals Pvt. Ltd. Through Director underscores the gap between the GST Council's purely consultative mandate and the reality in which the states have willingly abdicated their right to tax in favour of an artificial cabal, called the GST Council..——.THE competence of the state legislatures and Parliament to make laws on the Goods and Services Tax [GST)] was not the central issue at the heart of the matter that the Supreme Court was considering in its judgment delivered yesterday in Union of India versus M/s Mohit Minerals Pvt. Ltd. Through Director. It was about ocean freight, and whether Integrated GST [IGST] can be imposed by splitting it into tax on what has been imported and the means of transportation..The government argued its right to impose the IGST, and the importers questioned its legality. The Supreme Court has merely confirmed the Gujarat High Court ruling that IGST on ocean freight was illegal. It then went on to draw the right inference that whatever GST Council recommends is not mandatory..“The council does not only function as a parliamentary committee but also as a Cabinet of sorts, and the decisions taken there are then pushed through the legislatures. It was necessary that the Supreme Court explicitly spelt out the nature of the council decisions as being recommendatory and not mandatory..Unfortunately, the council has become a Star Chamber – the arbitrary miniaturized court and council of the early Stuart period in early 17th century England which led to the English Revolution of the mid-17th century – where arbitrary decisions are taken and there is no further discussion. It is a natural development. The council does not only function as a parliamentary committee but also as a Cabinet of sorts, and the decisions taken there are then pushed through the legislatures. The practice becomes a precedent where the decision of the GST Council has the stamp of an executive authority..It was necessary that the Supreme Court explicitly spelt out the nature of the council decisions as being recommendatory and not mandatory. The court has reminded that the legislature is indeed the final authority where tax proposals need to be ratified, and a bunch of finance ministers from the states and from the Centre cannot assume that legislative authority..Also read: Is GST and its propulsion of the centre-state relationship into a fiscal war undermining the principles of cooperative federalism?.What the Constitution says.The Supreme Court verdict that the state legislatures can make their own laws in relation to the GST imposed by the Union or the state is only a validation of Article 246A(1) of the Constitution, brought in by the 101st Constitutional Amendment, which says, "Notwithstanding anything contained in Articles 246 and 254 Parliament, and subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or such State." .The implication is that a state legislature can pass a GST law which pertains to the state, and that it need not necessarily depend on any recommendation made by the GST Council. It would of course mean that the GST Council is a mere consultative body and nothing more than that..It is this basic principle that the Supreme Court has reiterated in its judgment..This council has been written into the Constitution as a federal mini-cabinet, a constitutional monstrosity if ever there was one, because it did not have the limitations that cabinets or council of ministers usually have in our constitutional system. Cabinets cannot implement laws unless they are debated and passed in the state legislatures and in Parliament. This aspect of legislative ratification was left wide open. There was not even a clause to say that all decisions of the GST Council are subject to legislative approval. The consensus is a practice that the council has adopted, which the Constitution does not provide for it. As a matter of fact, it is the majority view – and this majority is set at three-fourths – that will prevail..“This council has been written into the Constitution as a federal mini-cabinet, a constitutional monstrosity if ever there was one, because it did not have the limitations that cabinets or council of ministers usually have in our constitutional system..Article 279A(9) of the Constitution states:."Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:-.a)the weight of the Central Government shall have the weightage of one-third of the total votes cast and,b)the votes of all the State Governments taken together shall have the weightage of two-thirds of the total votes cast in that meeting.".Though the wording in the 101st Constitutional Amendment, which brought in GST, clearly refers to the GST Council 'recommendations', the latter is made mandatory on the pretext that it was based on consensus arrived by the states..Also read: Politics Behind not Appointing GST Council Vice-chairman.Why political parties back this anti-federal institution.If there is a split in the two-third votes of the state governments, the Union Government has the advantage. The current Bharatiya Janata Party [BJP] government of Prime Minister Narendra Modi is keen to have as many BJP state governments as possible so that the objections of the dissenting state governments can be overruled..The attitude of the Modi government is not peculiar. If there is an Indian National Congress government at the Centre, for instance, it would adopt the same imperious attitude. Those ruling in the Centre hold the view that they have a better sense of the national interest than the state governments. Both the Congress and the BJP do not believe in the democratic principle of federalism – that it is the sum of the state governments' views that should determine national interest..The current BJP union government is keen to have as many BJP state governments as possible so that the objections of the dissenting state governments can be overruled..It is amazing that the states did not object to this. Nor did leaders of regional parties, who usually shout from rooftops about the rights of the states, choose to protest. The smart-alecky thought leaders in all political parties were thrilled by the idea of GST, and if they had any differences, it was about details, and not the idea itself, whereas the idea itself is anti-federal and anti-democratic in nature. It is anti-federal because the states have abandoned their right to tax, which is the fundamental right of any elected government, and they have surrendered this to this artificial cabal called the GST council.
