Aparna Shrivastava
B A,L.LB(Hons.), 6th Semester
Dr. Ram Manohar LohiyaNational Law University, Lucknow, Uttar Prades

India is the largest democracy in the world and has the world’s lengthiest constitution. The constitution is the supreme law of the land and there are few basic structures of the constitution which cannot be amended by the Parliament and federalism is one of it[1]. Federalism is basically the demarcation of power between the centre and the states[2]. It is relevant to point out here that cooperative federalism is nothing but one of its type because although there is a division of powers yet it would not be correct to assume that various governments act in watertight compartments. This concept was developed in the 20th century. CROWIN defines co-operative federalism as “the state and the national governments are regarded as mutually complementary parts of a single governmental mechanism whose powers are intended to realize the current purpose of government according to their applicability to the problems in hand.”[3]

If we take this definition into consideration we could see that the 101st Constitutional Amendment Act, 2016 is the best example of cooperative federalism in India as it has already been stated by the Supreme Court that “the union and the states are co-equal in the Indian Federal Structure”.[4]

The question here arises is that whether GST is following the cooperative federalism or not? This answer is given below supported by the arguments. Argument 1 deals with article 246A which is added in the constitution after the amendment and second deals with the article 279A(9).

Article 246A is basically giving powers to both Centre and State to make law with respect to levy of GST[5], which clearly indicates that it is concurrent power to both the governments and it is different from the subjects enshrined in the concurrent list of Schedule VII. When any state makes a law then it can be overridden by the law made by the parliament but here it is not the case as states are free to make laws with respect to GST i.e., SGST and Centre cannot interfere.

When the 101st Constitutional Amendment Act, 2016 was passed the legislatures kept the principle of cooperative federalism into consideration. Therefore, they added Art. 279(A) (9) which talks about the voting rights of the centre and the state in the GST Council. If we talk about the GST council into consideration then we can notice that how the parliament followed the concept of cooperative federalism as both the centre and the states are enjoying veto power.[6] When the said council was constituted then the vote share was divided between the centre and the states i.e., one-third to the centre and two-third to the states. It is very clear with the said voting share that the GST is following the principle of cooperative federalism. It is important to point out here that the said provision is included in the amendment act to ensure the cooperative federalism. “The existing pattern of vote-share in the GST Council ensures that no decision can be taken by the Council either by the Centre or the States acting on their own. Hence, neither the States nor the Centre alone can take a decision in the Council, since 3/4th weight to the States would upset the federal balance between the Centre and the States. Presently, in the concurrent list, in case of any difference between Central and State legislation, the Central legislation prevails. The present weight of votes in the GST Council would ensure that neither the Centre nor the States are able to take a decision without the support of the other. In other words, both would enjoy a veto”.[7]

Further, “with Centre holding only 1/3rd of the votes, the Centre would require support of 20 States/Union Territories to get a resolution passed. This shows that Centre would need co-operation of States to get any decision taken at the GST Council”.[8]

The framers incorporated into the Constitution, an infrastructure to promote cooperation, coordination and minimize tensions, among the various governments. Several features and provisions of the Constitution have been deliberately designed to institutionalize the concept of Centre-State cooperation[9]. There are following examples of cooperative federalism existing in Constitution;

  • “Article 252: Provisions for enabling Parliament to legislate in the State area on the request of two or more States,
  • Article 243-I: Constitution of Finance Commission and Scheme of financial relations between the Centre and the States,
  • Article 275 and Article 282: Grants-in-aid under the scheme of Centre-State administrative relationship along with provision for all-India services,
  • Article 307: Creation of agencies for the purposes of articles 301, 302, 303 and 304”.

In the similar manner Article 246A has been incorporated into the Constitution through the 101st Constitutional Amendment Act, 2016 so as to promote ‘Cooperative federalism’.

It is also necessary to point out here that when the said amendment act was not passed, then to India followed the concept of cooperative federalism, which is why after passing the amendment act the question of the violation of federalism arises. The said question has also been answered in the preceding paragraphs. As far as the GST is concerned then both the states and the centre have equal say in levying the goods and services tax. For example, if the GST is levied on a commodity at the rate of 12% then the centre and the state both will get 6% each, neither the centre nor the state can enjoy the whole benefit. Hence, it is absolutely correct to say that GST is following cooperative federalism.

[1] Keshavananda Bharati v. State of Kerala, A.I.R. 1973 S.C. 1416, ¶ 368.

[2] S. R. Bommai v. Union of India, (1994) 3 S.C.C. 1.

[3] U.S.A. CONST. Senate Doc., 14(1953).

[4] Jindal Stainless Steel v. State of Haryana, (2017) 12 S.C.C. 1.

[5] Article 246A(1), Constitution of India.

[6] PARLIAMENT OF INDIA, RAJYA SABHA, REPORT ON THE CONSTITUTION TWENTY-SECOND AMENDMENT, 2014 ¶ 2.68.

[7] Id.

[8] PARLIAMENT OF INDIA, RAJYA SABHA, REPORT ON THE CONSTITUTION TWENTY-SECOND AMENDMENT, 2014 ¶ 2.69.

[9] M.P. JAIN, INDIAN CONSTITUTIONAL LAW, (Fifth Reprint, New Delhi: Wadhwa and Company) 2008.

Compiled by GSTstreet for #GSTManthan

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