The President of India had given his assent on 8 September 2016 to the Constitution (One Hundred and First Amendment) Act, 2016, which amends the Constitution of India for introducing the Goods and Services Tax (GST). This Amendment Act has been notified in the Gazette on 8 September 2016. However, the provisions of the said Act may be brought into force by separate notifications in the Gazette. Now, on 10 September, 2016, the Government has notified the coming into force of Section 12 of the said Amendment Act which inserts a new Article 279A in the Constitution with effect from 12 September 2016. This Article relates to constituting the Goods and Services Tax Council (GST Council). So, now the way has been cleared for constituting the GST Council, though the said Council itself is yet to be formally constituted. Sub-clause (1) of Article 279A (which has come into force from today, i.e., 12 September 2016) is reproduced as under:
“279A. Goods and Services Tax Council.- (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council.”
It is pertinent to point out that the “date of commencement” has been defined in Section 1(2) of the said Amendment Act, which is as under:
“(2) It shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint, and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the commencement of that provision.”
Thus, the “date of commencement” in respect of Section 12 of the said Amendment (which inserts Article 279A in the Constitution) shall be 12 September 2016 on which date this provision has come into force.
This means that within a period of 60 days from 12 September 2016, the President is required to constitute the GST Council.
It may be noted that it has been wrongly mentioned in media (for example, see the Economic Times) that the GST Council itself has been notified. That is wrong. What has been done is the notification of the coming into force of Article 279A of the Constitution, under which the President is required to constitute the GST Council within 60 days. Therefore, a separate notification of constitution of the GST Council will have to be issued in the name of and by order of the President. It is expected that the GST Council may be constituted in this manner in the next few days.
The GST Council shall consist of the following members:
(a) the Union Finance Minister…………………… Chairperson;
(b) the Union Minister of State in charge of Revenue or Finance…………….. Member;
(c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government………………..Members.
One of the above members will be chosen as the Vice-Chairperson of the GST Council.
The Goods and Services Tax Council is empowered to make recommendations to the Union Government and the State Governments on the following matters:
(a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax;
(b) the goods and services that may be subjected to, or exempted from the goods and services tax;
(c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-State trade or commerce under article 269A and the principles that govern the place of supply;
(d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax;
(e) the rates including floor rates with bands of goods and services tax;
(f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster;
(g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and
(h) any other matter relating to the goods and services tax, as the Council may decide.
Further, the GST Council shall also 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, for which GST will not be applicable at this stage.
It is also laid down in Article 279A that while discharging its functions, the GST Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services.
Every decision of the GST Council is required to 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 vote of the Central Government shall have a weightage of one-third of the total votes cast, and
(b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.
It is noteworthy that one-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. However, no act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of— (a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (c) any procedural irregularity of the Council not affecting the merits of the case.
An important provision of Article 279A relates to the dispute adjudication system. It is provided that the Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute — (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other side; or (c) between two or more States, arising out of the recommendations of the Council or implementation thereof.