Why In NEWS?

• Customers will have to pay 5% GST on pre-packed, labelled food items like atta, paneer, and curd, besides hospital rooms with rent above ₹5,000 from 25/07/22 with the GST Council’s decision coming into force.

GST Council

• As per Article 279A (1) of the amended Constitution, the GST Council has to be constituted by the President.
• As per Article 279A (4), the Council will make recommendations to the Union and the States on important issues related to GST, like the goods and services that may be subjected or exempted from GST, model GST Laws, principles that govern Place of Supply, threshold limits, GST rates including the floor rates with bands, special rates for raising additional resources during natural calamities/disasters, special provisions for certain States, etc.
• Hence the GST council is a constitutional body.

How are decisions made in the GST council (GSTC)?

• The assignment of concurrent jurisdiction to the Centre and the States for the levy of GST required a unique institutional mechanism that would ensure that decisions about the structure, design and operation of GST are taken jointly by the two.
• The GST Council is headed by the Union Finance Minister, and comprises of the Minister of State(Revenue) and the State Finance Ministers to recommend on the GST rate, exemption and thresholds, taxes to be subsumed and other matters.
• One-half of the total number of members of GSTC form quorum in meetings of GSTC.
• Decision in GSTC are taken unanimously or by a majority of not less than three-fourth of weighted votes cast.
• Centre has one-third weightage of the total votes cast and all the states taken together have two-third of weightage of the total votes cast.

Are the decisions binding on the states?

• In Union of India Vs Mohit Minerals Pvt. Ltd. The Supreme Court of India held that the recommendations of the GST Council are not binding on the Union and States
• Parliament intended for the recommendations of the GST Council to only have a persuasive value, particularly when interpreted along with the objective of the GST regime to foster cooperative federalism and harmony between the constituent units
• Hence the states are free to make their own laws under the state GST

Model Question:

Q. With respect to the GST council, consider the following statements:

1. GST council is a statutory body under the Central GST Act,2017
2. GST council is headed by the Prime Minister.

Which of the above statements is/are INCORRECT?

(a) 1 only

(b) 2 only

(c) Both 1 and 2

(d) Neither 1 nor 2

Answer: C

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