Introduction: The Madras High Court recently rendered a significant judgment on the nature of GST Council’s recommendations. In response to an unstarred question in the Lok Sabha, Shri Balashowry Vallabhaneni sought clarification on the implications of this ruling. This article delves into the key aspects of the judgment and its potential impact on the government’s authority to modify GST rates based on the Council’s suggestions.
Read: GST Council Can Recommend Rates, But Can’t Determine Classification: HC
Detailed Analysis:
(a) Government’s Perspective on the Judgment: The government’s stance is rooted in Article 279A(4), which empowers the GST Council to make recommendations to the Union and States regarding goods and services subject to or exempted from the GST. Additionally, Section 9 of the Central Goods and Services Act, 2017, explicitly states that GST collection is contingent upon notifications by the government based on the Council’s recommendations. The Madras High Court judgment, stating that these recommendations are only recommendatory, does not diminish the government’s authority in implementing GST rate changes.
(b) Future Implications on GST Rates: The judgment does not signal a restriction on the government’s ability to alter GST rates in accordance with the Council’s recommendations. The government retains the prerogative to make necessary changes, and the judgment does not curtail this power. The implementation process, carried out through notifications laid before the Parliament, remains unaffected.
(c) GST Recommendations Implemented Without Legal Amendments: The answer provided by the Minister of State in the Ministry of Finance clarifies that all recommendations leading to changes in GST rates are implemented through notifications. The specific number of recommendations implemented without legal amendments or notifications is not disclosed. However, the government’s commitment to following due process underscores the importance of legal frameworks in implementing GST changes.
(d) The Judgment’s Impact: The Madras High Court’s judgment does not impact the government’s authority to modify GST rates. The government will continue to exercise its powers in this regard, making changes as needed based on the GST Council’s recommendations. The judgment reaffirms the existing legal framework, emphasizing the collaborative role of the Council and the government in shaping GST policies.
Conclusion: In conclusion, the Madras High Court’s judgment on the nature of GST Council’s recommendations has been clarified by the Minister of State in the Ministry of Finance. The government’s powers to change GST rates remain intact, and the judgment does not impose any limitations on this authority. This article has provided a comprehensive analysis of the judgment, shedding light on its implications for the government’s role in shaping and implementing GST policies.
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GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE
LOK SABHA
UNSTARRED QUESTION NO.2451
TO BE ANSWERED ON MONDAY, DECEMBER 18, 2023/AGRAHAYANA 27, 1945 (SAKA)
JUDGEMENT OF MADRAS HIGH COURT ON GST COUNCIL’S
RECOMMENDATIONS
- SHRI BALASHOWRY VALLABHANENI:
Will the Minister of FINANCE be pleased to state:
(a) the manner in which the Government looks at the recent judgment of the Madras High Court that GST Council’s recommendations are only recommendatory;
(b) whether it means that henceforth the Government cannot change GST rates based on the recommendations made by the GST Council;
(c) the number of GST recommendations so far implemented without legal amendments or issuing notifications; and
(d) the impact of above judgment in this regard?
ANSWER
MINISTER OF STATE IN THE MINISTRY OF FINANCE
(SHRI PANKAJ CHAUDHARY)
(a) to (d): Article 279A(4) provides that GST Council shall make recommendations to the Union and States on, interalia, the goods and services that may be subjected to, or exempted from the goods and services tax. Further, Section 9 of the Central Goods and Services Act, 2017 clearly mention that the GST will be collected on supply of goods and services as may be notified by the Government on the recommendations of the Council.
All recommendations of the GST Council in respect of change in GST rate are implemented through notification and laid before the Parliament. The Government shall, wherever required, continue to make changes in GST rates based on the recommendations of the GST Council. The judgement of the Madras high Court does not impact the power of the Government in this regard.
