GST Council decisions are not legally binding on the Centre or the States, but they are persuasive: SC

The Supreme Court declared on Thursday that the suggestions of the Goods and Services Tax (GST) council are not binding on the Union and States, but have persuasive value because the nation has a cooperative federal framework.

A bench of Justices DY Chandrachud, Surya Kant, and Vikram Nath also ruled that while the Centre and State governments have concurrent rights to act on GST, the council must work together to reach an acceptable solution.

According to Article 246A, both Parliament and the state legislature have equal authority to legislate on taxation issues.

It stated that Article 246A recognises the Centre and the State as equals, while Article 279 of the constitution states that the Centre and the State cannot operate independently of each other.

The Supreme Court stated that the GST council’s recommendations are the result of collaborative conversations between the Centre and the States and that it is not required that one of the federal units have a larger share.

According to it, Indian federalism is a conversation between cooperative and non-cooperative federalism, and the Centre and States are always in discussion.

The court pointed out that there are no provisions in the GST Act of 2017 that deal with inconsistencies between the legislation drafted by the Centre and the States, and it is up to the council to advise them appropriately whenever such situations arise.