SC judgment does not impact GST Council functioning
Finance Ministry sources said Thursday's ruling does not have any bearing on the way GST has been functioning in India.
- May 20, 2022,
- Updated May 20, 2022 7:23 AM IST
The central government is of the view that the Supreme Court judgment does not in any way lay down anything new as far as the institutional mechanism for the Goods and Services Tax (GST) is concerned.
A Supreme Court bench presided over by Justice DY Chandrachud, has in a case pertaining to the levy of service tax and integrated GST on ocean freight, held that the recommendations of the GST Council are not binding on the Centre or the states.
When reached for comments, Finance Ministry sources said Thursday's ruling does not have any bearing on the way GST has been functioning in India, nor does it lay down anything fundamentally different to the existing framework of GST.
“SC has only elaborated this mechanism while making its observations. This judgment does not in any way lay down anything new in so far as the GST institutional mechanism is concerned, does not have any bearing on the way GST has been functioning in India, nor lays down anything fundamentally different to the existing framework of GST,” the sources added.
The sources further clarified that the GST Council has been working with a collaborative institutional mechanism, where Centre and states follow the recommendations of the Council, which have been arrived at with consensus.
"There has been only a solitary instance where the Council took a decision by voting and even in this case the dissenting states implemented the decision of the GST Council. In all other instances, which run into more than a thousand, the decisions have been taken with consensus. Having said that, the constitutional scheme as stated above, is to the effect that Council is a body that makes recommendations to Centre and states. This has been the finest example of collaborative and cooperative federalism," the sources added.
Officials also pointed out that the Supreme Court has only elaborated this mechanism while making its observations.
As regards the specific issue involved in the matter relating to GST levy on the ocean fright, the Court, officials added, has observed that since the Indian importer is liable to pay IGST on the ‘composite supply’, comprising supply of goods and supply of services of transportation and insurance, among others, in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act.
Also read: Recommendations of GST Council are not binding, says Supreme Court
The central government is of the view that the Supreme Court judgment does not in any way lay down anything new as far as the institutional mechanism for the Goods and Services Tax (GST) is concerned.
A Supreme Court bench presided over by Justice DY Chandrachud, has in a case pertaining to the levy of service tax and integrated GST on ocean freight, held that the recommendations of the GST Council are not binding on the Centre or the states.
When reached for comments, Finance Ministry sources said Thursday's ruling does not have any bearing on the way GST has been functioning in India, nor does it lay down anything fundamentally different to the existing framework of GST.
“SC has only elaborated this mechanism while making its observations. This judgment does not in any way lay down anything new in so far as the GST institutional mechanism is concerned, does not have any bearing on the way GST has been functioning in India, nor lays down anything fundamentally different to the existing framework of GST,” the sources added.
The sources further clarified that the GST Council has been working with a collaborative institutional mechanism, where Centre and states follow the recommendations of the Council, which have been arrived at with consensus.
"There has been only a solitary instance where the Council took a decision by voting and even in this case the dissenting states implemented the decision of the GST Council. In all other instances, which run into more than a thousand, the decisions have been taken with consensus. Having said that, the constitutional scheme as stated above, is to the effect that Council is a body that makes recommendations to Centre and states. This has been the finest example of collaborative and cooperative federalism," the sources added.
Officials also pointed out that the Supreme Court has only elaborated this mechanism while making its observations.
As regards the specific issue involved in the matter relating to GST levy on the ocean fright, the Court, officials added, has observed that since the Indian importer is liable to pay IGST on the ‘composite supply’, comprising supply of goods and supply of services of transportation and insurance, among others, in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act.
Also read: Recommendations of GST Council are not binding, says Supreme Court