GST Council: Structure, Voting, Recommendations & Role in Fiscal Federalism

Summary: The GST Council, constituted under Article 279A of the Constitution, is the principal constitutional forum through which the Union and States coordinate GST policy in India. Its composition, functions and weighted voting mechanism reflect the federal character of GST: the Centre carries one-third of the weighted votes, the States collectively carry two-thirds, and decisions require at least a three-fourths weighted majority of members present and voting. The Council recommends GST rates, exemptions, model laws, thresholds, principles governing inter-State supplies and place of supply, among other matters. The Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd. clarified that GST Council recommendations are not binding on Parliament and State Legislatures in the exercise of their primary legislative powers, while recognising the Council’s important role in cooperative fiscal federalism. The Council’s continuing practical significance is illustrated by the 56th GST Council meeting in September 2025, which recommended major rate rationalisation and other GST reforms.

Introduction

The Goods and Services Tax (GST) was implemented in India with the goal of creating a more unified indirect tax regime. But consolidating various taxes from the Central and State governments into a single framework was not simply a question of passing a new tax bill. It also needed a mechanism in the constitution to ensure that the Union and the States played a role in the development of the GST regime.

This is where the Goods and Services Tax Council (GST Council) comes into play.

The Constitution (101 Amendment) Act, 2016, has inserted Article 279A in the Constitution of India. The Constitution of India has been amended by the Constitution (One Hundred and First Amendment) Act, 2016, which has introduced Article 279A. It offers a common ground to Union and States to discuss and suggest recommendations on crucial issues on GST. They consist of tax rates, exemptions, thresholds, model GST laws and principles on the levy and apportionment of GST.

The Council at first sight looks just like another institution engaged in the administration of GST. But its constitutional makeup renders it a far more important. The Union and the States have different weights to their votes, and key votes are decided by three fourths weighted vote. In this system, it tries to make sure that both sides cannot make a decision on their own.

The Supreme Court in the case of Union of India v. Mohit Minerals Pvt. Ltd. (2022) has honed the constitutional contours of the GST Council. The Court had stated that the recommendations of the GST Council are not mandatory on the Parliament and State Legislatures. This does not mean that the Council is insignificant either. It continues to be the major constitutional platform for coordination of the Union and the States on GST policy.

With the ongoing development of GST, the working of the Council has become even more relevant. For example, the 56th GST council meeting in September 2025 has suggested that there should be major changes in the GST rate and a rationalisation of the existing rate structure.

Thus, the understanding of the GST Council must extend beyond its constitution and its functions, to the understanding of the voting dynamics in the Council, the interactions of recommendations with the legislative process and the implications of functioning on fiscal federalism in India.

1. Constitutional Foundation of the GST Council

GST Council’s powers are in the direct line of the Constitution. The Constitution (One Hundred and First Amendment) Act, 2016 added Article 279A which laid down the “constitution of the GST Council”. The amendment to the Constitution was one of the major steps towards the implementation of the Goods and Services Tax regime.

The President is empowered to set up a Council under Article 279A (1) of the Constitution of India for the Goods and Services Tax regime, which is referred to as the Goods and Services Tax Council.

The Council has to be read in tandem with articles 246A and 269A. Under Article 246A, Parliament and subject to the constitutional scheme, State Legislatures have powers to enact laws relating to GST. Article 269A – levy and collection of inter-State supplies of Goods and Services Tax. The Union and States then coordinate their GST policy through an institutional mechanism as provided in Article 279A.

So, the constitution design does not make the GST entirely Union Government, rather it is a mix of states and the Union Government. Rather, it establishes a system of government in which the role of both levels is important. In carrying out its functions, the Council shall also have regard to the need for a harmonised structure of GST and development of a harmonised national market in goods and services, in accordance with Article 279A (6).

This provision gives one of the principal motivations for the Council’s creation, GST needs to have reasonable uniformity, but that uniformity must be able to function within the framework of the Indian federal constitution.

2. Composition of the GST Council

Article 279A (2) provides for the composition of the Council.

It consists of:

• the Union Minister of Finance, who is the Chairperson; and
• The Union Minister of State in charge of Revenue or Finance, who is a member; and
• The Minister, who is a Member, responsible for Finance or Taxation or any other Minister nominated by the Government of each State.

Under Article 279A (3) the State representatives elect one of their own to serve as Vice-Chairperson. This composition is significant because it allows for a representation of the Union and the States in the institution that is tasked with discussing GST policy. The Council is not therefore entirely a Central tax body. The structure of it is a joint forum, which is constitutionally established. In practical terms this is achieved by the institution where State governments have a direct voice where issues like tax rates, exemptions and other major GST issues are considered.

3. What does the GST Council do?

The tasks and powers of the Council are largely outlined in Article 279A (4). The Council submits recommendations to the Union and the States on a number of issues such as:

1. Taxes, cesses and surcharges which may be levied as a part of GST;

2. Goods and services that can be charged or exempted from GST;

3. Model GST laws;

4. Principles of levy and apportionment of GST on inter-State supplies;

5. Principles governing place of supply;

6. The limit of the turnover at which goods and services can be exempted;

7. GST rates with bands (floor);

8. Special prices for a limited time for events like natural catastrophes or disasters;

9. Special provisions concerning some States; and

10. Any other matter as the Council may decide.

The Council also suggests the date for the imposition of GST on petroleum crude, high speed diesel, and petrol, natural gas and aviation turbine fuel. These functions indicate that the Council’s role is not just to make recommendations about tax rates. It plays a wider role in the overall development and harmonisation of the GST system.

4. How Voting in the GST Council Works?

The weighted voting system is one of the most unique aspects of the GST Council.

Article 279A (9) state that the decision of the Council shall be taken by a majority of not less than three-fourths of the weighted votes of the members present and voting.

According to the Constitution, the voting power is shared between the Union and the States:

• The Central Government receives ⅓ of all the weighted votes.
• All the State Governments together receive 2/3 of the total weighted votes.

This is not counting the number of ministers present, but voting based on the number of ministers present. The Centre has a third of the votes, and the States have two-thirds of the votes. But neither side has a majority of three-fourths ordinarily.

For instance, the Centre is not able to pass a proposal by simply voting for it. Likewise, the States, on their own, are unable to achieve three-fourths without adequate Central Government support. It is one of the most explicit instances where the Constitution strives to strike a balance between uniformity and State involvement in the policy of GST. The Council’s official documents also acknowledge this form of weighted voting as part of the Council’s constitutional decision making.

5. Quorum and Procedure

One-half of the total membership of the Council is the quorum for its meetings, in accordance with Article 279A (7). The procedure for performing the functions of the Council is determined by Article 279A (8).

This procedural autonomy is significant because of the variety of issues which the Council has to address. It holds meetings on taxation and administration, exemptions, compliance and other policy issues.

The GST Council has kept records of its meetings, agendas and minutes, thereby continuing the institutional nature of the Council, instead of a periodic advisory body. The official website of the GST Council contains minutes of the meetings from the first meeting in September 2016.

6. Goods and Services Tax (GST) and Cooperative Federalism

The concept of cooperative federalism is closely linked with the GST Council. Prior to the introduction of GST, there were a number of different indirect taxes levied by the Union and the States within their respective powers. The GST was supposed to be a relatively harmonised national tax system, so there was a need for greater coordination.

The Council provides an institutional space for this coordination. Union has its own budgetary concerns, States its own budgetary needs and economic agenda. It is thus necessary to discuss a common GST system between both levels of government. The Council’s organisation is designed to support this.

But, cooperative federalism doesn’t guarantee that all States will agree on all decisions. The economic structure and revenue interest of different States can be different. A State with a manufacturing-based economy might have different concerns than a State with a services or consumption-based economy.

So the actual challenge for the Council is not just to achieve uniformity. The aim is to establish a workable compromise between uniform taxation and a variety of State interests.

7. Will the recommendations of the GST Council be mandatory?

This is likely to be the most significant constitutional issue that is being raised about the GST Council. The question was referred to the Supreme Court in the case of Union of India v. Mohit Minerals Pvt. Ltd.

In the case, among other issues, the levy of IGST under reverse charge mechanism in connection with CIF imports was discussed. The judgment also looked into the constitutional validity of the recommendations of the GST Council.

The Supreme Court has ruled that the recommendations of the GST Council are not binding on Parliament and State Legislatures. The Court pointed out that Article 279A refers to the role of the Council in terms of “recommendations”. It is not a legislative body that automatically makes the Council’s recommendations into law.

The Court also recognised the importance of fiscal federalism. The powers to make laws in accordance with the constitution are vested in the respective legislative bodies of Parliament and State Legislatures as per Article 246A. If the Council’s recommendations were binding, then it would have a legislative role which is not clearly provided for in the Constitution.

The judgment has been reported as Union of India v. Mohit Minerals Pvt. Ltd. (2022) 10 SCC 700. However, this is not to say that the Council’s recommendations are of no practical value.

In fact, Council recommendations are a key driver in the formulation of GST policy. These are frequently the basis for further legislative or executive action in the context of the relevant statute.

The key difference is thus between:

Recommendation to lawmaking – law making – enforceable law.

It is, therefore, imperative that a taxpayer should differentiate between what is recommended by the GST Council and what is actually implemented by an Act, Notification, Rule or any other legally empowered instrument.

8. The significance of Mohit Minerals.

Mohit Minerals significance is not just about the specific issue of ocean freight. The judgment spelt out the constitutional status of the GST Council. If the recommendations of the Council became law, then the Council would have legislative power without being a legislature. This would lead to a debate on the constitutional authority of Parliament and State Legislatures.

The Supreme Court’s reading of the law does not take away the role of these legislations, but gives due recognition to the coordinating role of the GST Council. In this respect, the decision establishes a constitutional balance:

The GST Council offers coordination and recommendations, and the competent legislative and executive bodies enact and implement the recommendations through the appropriate constitutional and statutory processes. For legal professionals and taxpayers, this is especially significant as a Council recommendation should not be considered the final legal position.

9. The Contemporary Role of the GST Council

Its relevance is evident in the recent meetings of the Council. The 56th GST Council meeting was convened in New Delhi on 3rd and 4th September 2025. The Council made many recommendations, including substantial changes to the rates of GST and rationalisation of the current rate structure. The official recommendations were for a simplified structure with a standard rate of 18% and a merit rate of 5% and a special de-merit rate of 40% for certain goods and services.

The Council also proposed a number of exemptions and reductions in rates for insurance and goods that are frequently bought. The official document reveals that the recommendations extended beyond technical aspects of the GST and included many other sectors.

This is a good illustration of the practical value of the Council. The Council’s decision can have a ripple effect across the country. The Council’s recommendation needs to be implemented by the necessary legal means before the change is enforceable, however. Yet again, it’s a good reminder that the Council’s institutional influence is not necessarily the same as its formal legal authority.

10. Do the Voting System’s Provisions Satisfy the “Perfect Federal Balance”?

The weighted voting system is in place to ensure neither the Centre nor the States dominate the Council. It also raises some practical issues, however. The Centre has one-third of the voting weight, the States two-thirds. Meanwhile, a three-fourths vote is needed. So, most decisions will need to be supported by both sides.

On one hand, this helps to reach agreement and avoid making decisions alone. But from another point of view, it is not the system that implies that all States share the same interests. The economies of states vary, as do their consumption patterns and reliance on specific types of income.

For instance, an increase in the GST rate of a specific product could impact differently for different States because of the pattern of its production and consumption. The Council is thus required to balance two goals:

GST system harmonisation and safeguarding of legitimate fiscal interests of various governments. This is where the utility of the deliberative process takes as much importance as voting procedure.

11. Consensus is as important as voting.

The Constitution establishes a formal voting mechanism but the operation of a federal institution cannot rely solely on the principle of voting arithmetic.

GST has substituted multiple indirect taxes which were earlier collected by the Union and the States, separately. Cooperation is thus a major key to success of the new system.

Consensus is useful because it is easier to administer a tax system that impacts the entire country when the governments that will have to implement it have meaningfully participated in the process of its creation. Consensus should not be an absence of disagreement in the process, however.

There is a legitimate difference of opinion across different States as to rates, exemptions and revenue implications. The power of the Council is to offer a constitutional space in which these differences are discussed prior to the formation of a common policy stance. So, the formal voting rule is the constitutional rule and consultation and negotiation is what puts the constitution into practice.

12. Practical importance for taxpayers

The GST Council does not directly engage with the taxpayer; however, its actions can have a profound indirect effect.

For instance, the rate of GST may be recommended, which will impact on the tax on goods and services. Advise on exemptions may have an impact on whether a transaction is subject to taxation. Business obligations may change as a result of changes in registration and compliance. But taxpayers need to take care not to only trust in news reports or Council press releases.

A Council recommendation is not necessarily the final enforceable legal instrument.

For practical purposes, taxpayers should review the following:

• Act or statute;
• Notification;
• Circular;
• Rule; or
• Other legally applicable instrument.

This is especially true when a recommendation includes a tax rate change or exemption. The position taken by the taxpayer is dependent on when and how the final legal instrument takes effect.

13. Some issues that deserve more attention.

The GST Council has contributed immensely in the formulation of the GST framework but there is scope to improve the way it functions.

There is need for greater clarity about recommendations and their legal implementation on the one hand, and their implementation on the other. While the Mohit Minerals judgment has brought out the constitutional distinction, taxpayers could still be misled by a Council announcement into believing it was a legal amendment that took effect at once.

Secondly, the effect of any significant decision under the GST regime on various States should be carefully evaluated. The uniformity is essential for a common market, but the financial situation of the separate States cannot be disregarded.

Third, increased transparency of the economic rationale for large rate changes would facilitate the understanding of GST policy by taxpayers, businesses and researchers.

Finally, the Council needs to maintain a balance between stability and reform. A tax system that doesn’t evolve can be less responsive to economic change, while frequent changes can cause compliance challenges for businesses.

It is the ongoing responsibility of the Council to enhance GST without causing undue confusion

Conclusion

The GST Council is one of the most important institutions created as part of India’s transition to GST. Its constitutional basis is provided by Article 279A, which is a result of the need to merge the common tax base with the federal distribution of powers in India.

It brings the Union and the States together in its composition and it tries to ensure that important decisions need to be taken with cooperation in its weighted voting system. The Centre has a ⅓ voting power, and States have a ⅔ voting power, and a ¾ majority is needed to decide. But voting is not the only key to the constitutional importance of the Council.

In Union of India v Mohit Minerals Pvt. Ltd., the Supreme Court had made it clear that the recommendations of the GST Council are not binding on the Parliament and State Legislatures. This ensures the Union and States have the legislative authority to coordinate GST and the Council as the main arena for GST coordination.

The recent operation of the Council also demonstrates the relevance of its role. The 56th meeting in 2025 illustrates the impact that Council decisions can have on rates, exemptions and the overall structure of GST.

In conclusion, the GST Council may be said to be a constitutional link between tax uniformity and fiscal federalism. It is not just the votes the Centre and the States have that will make it succeed. It also relies on the concept of meaningful consultation, transparent decision-making and the capacity to reconcile various fiscal interests in the same framework of the GST.

The future of GST will thus rely not only on the laws themselves, but also on the working of the constitutional institution established to coordinate the laws.

References

1. Constitution of India, Articles 246A, 269A and 279A.

2. The Constitution (One Hundred and First Amendment) Act, 2016.

3. Central Goods and Services Tax Act, 2017.

4. Integrated Goods and Services Tax Act, 2017.

5. Goods and Services Tax Council, About GST Council, Government of India.

6. Goods and Services Tax Council, GST Council Meetings and Records, Government of India.

7. Union of India v. Mohit Minerals Pvt. Ltd., (2022) 10 SCC 700.

8. Goods and Services Tax Council, Recommendations of the 56th Meeting of the GST Council, 3 September 2025.

9. Ministry of Finance, Press Information Bureau, Frequently Asked Questions on the Decisions of the 56th GST Council, 3 September 2025.

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By Sneha Rani | BALLB Hons. | Lovely Professional University