News Update

GST - Neither SCN nor the order spell out the reasons for retrospective cancellation of registration, hence cannot be sustained: HCGST - Non-application of mind - If reply was unsatisfactory, details could have been sought - Record does not reflect that such exercise was done - Matter remitted: HCGST - Merely because a taxpayer has not filed returns for some period does not mean that registration is required to be cancelled with retrospective date also covering the period when returns were filed and taxpayer was compliant: HCGST - Petitioner's reply, although terse, is not taken into account while passing assessment orders - Petitioner put on terms, another opportunity provided: HCUnveil One Nation; One Debt Code; One Compliance Rule for Centre & StatesChina moves WTO against US tax subsidies for EVs & renewable energyMore on non-doms - The UK Spring Budget 2024 (See TII Edit)Notorious history-sheeter Mukhtar Ansari succumbs to cardiac arrest in UP jailTraining Program for Cambodian civil servants commences at MussoorieNY imposes USD 15 congestion taxCBIC revises tariff value of edible oils, gold & silver45 killed as bus races into ravine in South AfricaCBIC directs all Customs offices to remain open on Saturday & SundayBankman-Fried jailed for 25 yrs in FTX scamI-T- Once the citizen deposits the tax upon coming to know of his liability, it cannot be said that he has deliberately or willfully evaded the depositing of tax and interest in terms of Section 234A can be waived: HCHouthis attack continues in Red Sea; US military shoots down 4 dronesI-T- Secured creditor has priority charge over secured asset, over claims of I-T Department & other Departments; any excess amount recovered by Secured Creditor from auction of secured asset, over & above the dues payable to it, are to be remitted to the Departments: HCFederal Govt hands out USD 60 mn to rebuild collapsed bridge in BaltimoreI-T - Receipts of sale of scrap being part & parcel of activity and being proximate thereto would also be within ambit of gains derived from industrial undertaking for purpose of computing deduction u/s 80-IB: HCCanadian School Boards sue social media titans for 4 bn Canadian dollar in damagesI-T - Once assssee on year of reversal has paid taxes on excess provision and similar feature appeared in earlier years and assesee had payments for liquidated damages on delay of deliverables, no adverse inference can be drawn: HCFormer IPS officer Sanjiv Bhatt jailed for 20 yrs for planting drugs to frame lawyerST - Software development service & IT-enabled service provided by assessee was exempt from tax during relevant period, by virtue of CBEC's Notification & Circular; demands raised for such period not sustainable: CESTATUN says Households waste across world is now at least one billion meals a dayCus - Order rejecting exporter's request for conversion of Shipping Bills on grounds that the same has been made by exporter beyond period of three months from date of Let Export Order in terms of CBEC Circular No. 36/2010-Cus : CESTATIndia, China hold fresh dialogue for complete disengagement on Western borders: MEACus - No Cess is payable when Basic Customs Duty is found to be Nil: CESTATThakur says India is prepared for 2036 OlympicsCX - As per settled law, a right acquired as result of a statutory provision, cannot be taken away retrospectively unless said statutory provision so provides or by necessary implication has such effect: CESTAT
 
Binding nature of GST Council recommendations

AUGUST 03, 2022

By R K Singh

IN reply to un - starred question number 203, the Central government informed Rajya Sabha that the recent judgement of Supreme Court in the case of Mohit Minerals - 2022-TIOL-49-SC-GST-LB does not alter the Constitutional mechanism of GST Council. The government added that (i) the recommendations of the Council pertaining to GST laws are implemented through normal legislative process and to that extent the recommendations have only persuasive value (ii)however, the recommendations of the Council with respect to subordinate legislations e.g. those pertaining to rules, notifications and rates are binding on the states and Centre, and (iii) the Supreme Court judgment only augments this process.

2. The purpose of this article is to show that it is only in de jure sense that the recommendations of the Council pertaining to subordinate legislation are binding on Centre and the state governments. In the de facto sense, it is not so. It was so hinted in passing by this author in an earlier article but in the wake of the Central government's reply in the Rajya Sabha, it has become necessary to elaborate.

3. It is pertinent to point out that CGST Act, in its section 166 has a provision, similar to the provision which exists in all the taxation statutes. The said self-explanatory section is reproduced below for convenience:

"S. 166- Laying of rules, regulations and notifications

Every rule made by the Government, every regulation made by the Board and every notification issued by the Government under this Act, shall be laid, as soon as may be after it is made or issued, before each House of Parliament, while it is in session, for a total period of thirty days which may be comprised in one session or in two or more successive sessions, and if, before the expiry of the session immediately following the session or the successive sessions aforesaid, both Houses agree in making any modification in the rule or regulation or in the notification, as the case may be, or both Houses agree that the rule or regulation or the notification should not be made, the rule or regulation or notification, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be; so, however, that any such modification or annulment shall be without prejudice to the validity of anything previously done under that rule or regulation or notification, as the case may be.

(Similar provision exists in section 166 of the GST law of States)

It is thus evident that although (as has been stated by the Central government in Rajya Sabha and held by Supreme Court) Central Government and the state governments are bound to implement the recommendations of the Council with regard to Subordinate legislation ( viz. rules, regulations and notifications) and, therefore, will have to make/amend the rules and issue notifications prescribing rates or granting exemptions in accordance with the Council's recommendations, the rules so made/ amended or notifications so issued will have to be laid on the table of the Parliament / state legislatures. If the state legislatures/ parliament agree(s)to make any modifications in the rule(s)so made/ amended or the notifications so issued, as the case may be, or agree(s) that the rule so made/ amended or the notifications so issued should not be made/ amended/ issued, the rule so made/ amended or the notification so issued, as the case may be, shall thereafter have effect only in such modified form or be of no effect, as the case may be.

4. The governments in power in the Centre or in the states would obviously have majority support in the Parliament/ respective state legislatures and, therefore, if any of the states had to unwillingly make / amend any rules or issue any notifications as per the recommendations of the Council, it will easily be able to scuttle the same through the respective state legislatures. [Save if the government at the Centre changes soon after the recommendations are made by the Council but before the fulfilment of the statutory requirement of the said s. 166, occasion for such scuttling by Central government will not arise because to begin with no recommendation can be made by GST Council unless the Central government is on board.]

5. Thus, the Central government / Supreme Court is right, but only in de jure sense, to hold that the recommendations of the Council with regard to subordinate legislation are binding on the Central/ state governments but de facto Central government or any state governments will be able to scuttle those recommendations through Parliament or the respective state assemblies which, as has been acknowledged and held by Supreme Court in the said judgement, are not bound by the recommendations of the Council.

6. It seems that Supreme Court was not expressly sensitized to the requirement of subordinate legislation having to pass the muster of s. 166. As different parties are / may be in power in different states and may not always be ad idem to the Council's recommendations with regard to subordinate legislation, the day is not unforeseeable when the dissenting states will resort to the state assembly route enshrined in s. 166 to scuttle such recommendations, thereby throwing the fundamental strength of GST (one nation - one tax) into disarray.

[The author is former Member CESTAT and Sr. Partner, TLC Legal Advocates. The views expressed are strictly personal.]
(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

POST YOUR COMMENTS
   

AR not Afar by SK Rahman

TIOL Tube Latest

Shri Shailendra Kumar, Trustee, TIOL Trust, giving welcome speech at TIOL Awards 2023




Shri M C Joshi, Former Chairman, CBDT




Address by Shri Buggana Rajendranath, Hon'ble Finance Minister of Andhra Pradesh at TIOL Awards 2023