There is considerable confusion amongst professionals, trade, and industry in respect of the change in GST rates effective 22.09.2025. While the Central Government has already issued the requisite notification under Section 9 of the CGST Act, 2017, certain State Governments have apparently not yet issued corresponding notifications under Section 9 of their respective State GST Acts.
This raises a fundamental question: Should business entities apply differential tax rates for CGST and SGST until such State notifications are issued?
For instance—
√ In the case of life and health insurance policies, the rate of tax has been reduced from 9% CGST + 9% SGST (18%) to NIL. If a particular State has not issued the corresponding notification, should the insurer apply 0% CGST and 9% SGST in that State?
√ Similarly, in the case of air conditioners, the rate of tax has been reduced from 14% CGST + 14% SGST (28%) to 9% CGST + 9% SGST (18%). Until the State issues its notification, should a trader or manufacturer apply 9% CGST and 14% SGST?
Such situations, if permitted, would not only create uncertainty but also defeat the very purpose of introducing GST as a uniform tax regime across the country. It would amount to a revival of the very fragmented regime that GST replaced, contrary to the express intention of Parliament, State Legislative Assemblies, and the Constitution.
Statutory & Constitutional Mandate
Article 279A of the Constitution of India, established the GST Council, which is empowered to recommend rates, exemptions, and principles of taxation to ensure uniformity of indirect taxes across the country.
Section 9 of the CGST and respective SGST Acts vests the power to notify rates in the government, but makes this power explicitly subject to the Council’s recommendations.
Hon’ble Supreme Court on the binding nature of Tax Rate Recommendations
The Hon’ble Supreme Court in the case of Union of India v. Mohit Minerals Pvt. Ltd., 2022 (61) GSTL 257 (SC) clarified that though recommendations of the GST Council are not binding in general, they acquire a binding character where the parent statute (e.g., Section 9 of the CGST/SGST Act) expressly requires the Government to act “on the recommendations” of the Council. The Hon’ble Supreme Court observed that provisions requiring the Government to act on such recommendations must be construed in light of the object of the enactment, namely, the establishment of a uniform taxation system across the country. It further emphasized that the GST framework was introduced to overcome the earlier regime, in which States prescribed disparate tax slabs and exemptions, leading to inconsistencies in indirect taxation.
Analysis
In light of the above, once the GST Council recommends a change in rate effective from a particular date, both the Central and State Governments are bound to act upon it. The binding nature arises not from the Council’s recommendation per se, but from the statutory mandate in Section 9, which conditions the exercise of delegated legislative power upon such recommendation.
Therefore, in my considered view, once the GST Council recommends a change in the rate of tax to be effective from a particular date, such recommendation becomes binding on both the Central and State Governments. Any failure on the part of a State Government to issue the corresponding notification cannot impede the operation of a uniform tax rate across the country.
Remedies
In the event of continued inaction by a State Government, affected business entities may approach the jurisdictional High Court or the Hon’ble Supreme Court under Article 226/32 of the Constitution, seeking a writ of mandamus directing the State to issue the requisite notification as such non-issuance is arbitrary, violative of Article 14, and contrary to the scheme of Article 279A and Section 9 of the SGST Act.
The Article is written by Advocate Vinay Kumar Shraff LLB, FCA, ACMA, ACS, Adv. Dip. in Mgmt Acct-CIMA (London), Certificate in International Taxation – ICAI, DISA – (ICAI).
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