ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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A Constitutional Farce?

GST Dispute Resolution Mechanism

The latest constitutional amendment to the Goods and Services Tax allows the gst Council to establish a dispute resolution mechanism that overlaps with the original jurisdiction of the Supreme Court. The global experience of non-judicial adjudication of administrative disputes suggests that the power of adjudication is incidental to the administrative function. The dispute resolution mechanism in its present form is deprived of the vital power to bind the state or central governments through an order. It cannot declare any statute that violates the harmonised structure of gst as illegal, which is a constitutional farce.

The Indian taxation framework had for some time been suffering from the burden of multiple taxes levied under many laws. The Goods and Services Tax (GST) was expected to eliminate the rot that had settled in the system, cut the clutter, and ensure the smooth functioning of the system. The constitutional amendment was just the first hurdle; issues like gauging the effect on union and state income, the rate of GST, the mechanism for dispute resolution, and so forth needed further clarifications. The GST Council is a new body created under Article 279A of the amendment; members include the union finance minister, the union minister of state for finance/revenue, and the finance ministers of each state (including union territories). Articles 269A and 279A(4) confer the GST Council with the power to make recommendations on several issues like the apportionment of revenue from interstate trade, taxes to be subsumed, exempted goods and services, model GST laws, etc.

The GST Council has the power to adjudicate intergovernmental disputes inter se states, between states and the centre, or between the centre and a few states versus the remaining states. These powers of the GST Council are worded similarly to Article 131—which deals with the original jurisdiction of the Supreme Court—and are without a doubt very powerful and will aid and assist in impartial out of court dispute resolution. Article 131 is used only when there is an intergovernmental dispute in the context of the constitutional relationship that exists between governments and the legal rights flowing therefrom (Government of National Capital Territory of Delhi and Ors v Union of India, 2016). The original jurisdiction of the Supreme Court under Article 131 may be invoked only after satisfying certain preconditions incorporated into it—the first is that the disputants must be state(s) and the union, and second, the dispute must pertain to a legal right (Basu 2011). Over the years, the Supreme Court has reaffirmed the position that when a state, as party to a litigation, affirms a legal right of its own which the Government of India has denied, or is interested in denying, Article 131 exists to provide constitutional solace (State of Rajasthan v Union of India 1977).

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Updated On : 5th Dec, 2017

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