GST vis-à-vis Cooperative Federalism by Aparna Shrivastava

The GST tax act is the largest ever fiscal legislation that subsumes and unifies all the erstwhile indirect taxes into one common and unified tax. It would terminate multiple taxes all around the country and would create an equal level playing field for all the stakeholders throughout the country.

Aparna Shrivastava

“Cooperative federalism stands for a philosophy in which sovereignty is shared: ‘the national and state governments work together in the same areas, sharing functions and therefore power’.”

– MD Reagen, The New


The GST tax act is the largest ever fiscal legislation that subsumes and unifies all the erstwhile indirect taxes into one common and unified tax. It would terminate multiple taxes all around the country and would create an equal level playing field for all the stakeholders throughout the country. It paves way for the economic integration and homogenization of India which was missing till now. GST law is the perfect specimen of cooperative federalism where the union and states have abandoned their power to realise the marvel and vision of one economic India. It’s is a giant leap that charts a new avenue for fiscal federalism in our country that aims on synergy, concord and concurrence instead of self-centeredness. This new commitment to reconcile union and state law into a harmonious legislative entity would become the hallmark of cooperative federalism.[1]


The soul and spirit of federalism[2] is the existence of union and state and the distribution of power[3] among the union and states[4]. The Constitution of India[5] provides for a federation which has strong centralising tendencies.[6] The federation of India does not follow the principle of “traditional federalism”[7], which is often attributed with the Constitution of US[8]. The Indian federalism has its own colour and peculiarity, has been designated as a basic feature[9] of the Indian Constitution.[10]

The 101st Amendment to the constitution has established the concurrent taxing in the country for the first time. A new conceptum has been adopted and embraced where the union and states will concomitantly levy tax on both goods and Services.[11] The new taxing regime has given certain privileges and powers to the centre, but in absolute pursuance and consonance of our constitutional scheme.


The word ‘cooperative federalism’ for the first time was defined by A.H Birch in his book[12] as “the practise of administrative cooperation between general and regional government, the practical dependence of the regional governments upon payments from the general governments”. The concept of cooperative federalism can be traced back to the period of World War II which led to the formation of K.C Wheare’s definition of federalism: ‘the general and regional governments of the country shall be independent each of the other within its sphere’[13]. The federal structure of India is a perfect example of cooperative federalism.[14] The main aim and goal of Indian Constitution[15] as enshrined in the preamble[16] has never been to maintain a concrete or traditional federal structure but to constitute Indian into a Sovereign, Socialist, Secular, Democratic, Republic.[17] The scheme of the Indian Constitution makes it clearly visible that, the institutions i.e. Union and State meet and interact at various levels in a manner which makes them achieve the cherished constitutional goal of co-operative federalism.[18]

GST has not usurped the taxing powers of the state so as to jeopardise the states. It is only because of our federal structure that the GST is dual[19], levied and administered by different governments. The union would levy and collect Central Goods and Services Tax (CGST)[20], and States would levy and collect the State Goods and Services Tax (SGST) on all transactions within the boundaries of states[21]. The union government will have the plenary power to levy and collect GST in the course of interstate trade or commerce, or imports known as Integrated GST (IGST)[22] but the amount so collected shall be arrogated and appropriated by both central and state governments. The determination and fixation of rates for CGST, SGST and IGST will be administered by the GST council which is neither an agent of States nor of the Union.[23] The GST council with have representatives from both union as well as the States, also the council is not a body of the Union but an independent body in itself.[24] Parliament and legislature of every state, have power to make laws with respect to goods and services tax imposed by the union or by such state.[25] A law made by union legislature in relation to GST will never supersede or overpower a state made GST law.[26] GST is a great specimen of cooperative federalism where the States and Central governments have co-operatively and jointly relinquished their taxing power, in order to adopt and accept the GST. The fact that more than half of the states have also assented to the amendment portrays the development of cooperation between states and centre which is a good update for the Indian democracy.


The primary focus of the constitution makers was never to devise a federal or a non-federal constitution but to have a system of governance which would cater to the needs of the people and meet the challenges of the changing world.[27] It was opined by C. Rangarajan that in order to meet and tackle the forces of globalisation and international competition, the federal framework of our country will to have sustain and endure some foundational changes.[28] The need for economic growth and development has necessitated the parliament of India to bring the impugned amendment[29]. GST act is in support of the cooperative federal structure and therefore paves the way for holistic growth.  GST law has been brought to achieve the values and ideals enshrined in the Preamble, part III[30] and part IV[31] of Indian Constitution. The Indian Constitution has been amended, to meet the current economic and fsical challenges of the modern world. The federal structure of India will undergo a change due to this amendment but the amendment in no way violates the federal frame work of the Indian Constitution, but rather it strengthens the cooperative federation of India.

[1] Robert Schutze, From Dual to Cooperative federalism, The Changing Structure of European law 103 (1st ed., 2009)

[2] O. Chinappa Reddy, The Court and the Constitution of India  222 (1st ed. 2008).

[3] Herman Fine, The Theory and Practise of Modern Government 166 (4th ed. 1961).

[4] A.V. Dicey, The Law of the Constitution 157 (10th ed. 1959).

[5] India Const 1950.

[6] Bhim Singh v. U.O.I & Ors, (2010) 5 SCC 538.

[7] Dr. Pradeep Jain etc. v. Union Of India And Ors., AIR 1984 SC 1420; see also Kuldeep Nayar & Ors. v. Union of India & Ors., (2006) 7 SCC 1.

[8] P.K Tripathi, Federalism: The Reality and the Myth, J.B.C.I. 254 (Aug 1974); see also Jindal Stainless Steel v. State of Haryana, (2017) 12 SCC 1; see also D.P. Kommers & J.E. Finn, American Constitutional Law 273 (3rd. ed.).

[9] Keshvananda Bharati v. State of Kera, (1973) 4 SCC 225.

[10] S.R Bomai v. Union of India, AIR 1994 SC 1918.

[11] India Const. art. 246A.

[12] A.H. Birch, Federalism, Finance, and Social Legislation in Canada, Australia, and the United States 305 (1st ed. 1955).

[13] K.C Wheare, Federal Government 10 (4th ed. 1963).

[14] R.S Sarkaria,  Sarkaria Commission on Centre-State Relations, No. IV/11017/1/ 83- CSR93 (1983).

[15] India Const 1950.

[16] India Const. Preamble.

[17] P.K Tripathi, Federalism: The Reality and the Myth, J.B.C.I. 268 (Aug 1974).

[18] Swaraj Abhiyan v. Union of India, 2007 SCC Online SC 782.

[19] India Const. art. 246A.

[20] The Central Goods and Services Tax Act, 2017, No. 12, Acts of Parliament, 2017.

[21] India Const. art. 246A, cl. 1.

[22] India Const. art. 269A, cl. 1.

[23] India Const. art. 279A.

[24] Id.

[25] India Const. art. 246A, cl. 1.

[26] Id.

[27] Dr. Chanchal Kumar, Federalism in India a critical appraisal, 3 JBM & SSR (September 2014).

[28] C. Rangarajan, Fiscal Federalism Some Current Concerns, 2 I.J.F.S. 13 (2012).

[29] The Central Goods and Services Tax Act, 2017, No. 12, Acts of Parliament, 2017.

[30] India Const. part. III.

[31] India Const. part. IV.


Compiled by GSTstreet for #GSTManthan



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