GST COUNCIL: CONSTITUTION AND FUNCTIONING

[Dr. Sanjiv Agarwal]

As per the Constitution as amended, GST Council is required to be Constituted under article 279A of the Constitution which was so done by the President on 12^th September, 2016 vide Notification dated  10.09.2016. New Article 279A of the Constitution was notified to come into force w.e.f. 12.09.2016 and vide Notification dated 15.09.2016, the President of India Constituted the GST Council.

Clause 279A

According to article 279A of the Constitution as made operative w.e.f. 12.09.2016, the President shall, within sixty days from the date of commencement of the Constitution (One Hundred and Twenty-second Amendment) Act, 2014, by order, constitute a Council to be called the Goods and Services Tax Council.

Composition of Council

The GST Council shall comprise of a Chairperson, Vice Chairperson and members. The President of India has since Constituted the GST Council comprising of the following members-

1. The Union Finance Minister … Chairperson
2. The Union Minister of State in charge of Revenue or Finance … Member
3. The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government … Members

The members of GST Council shall amongst themselves, elect one of them as Vice Chairman of the Council. The states shall be represented by the Minister incharge of Finance or Taxation or any other Minister nominated by the State but he or she should be a Minister in the State Government.

Functioning of GSTC

Central Government has inter alia, taken the following decisions for smooth functioning of GST Council -

1. Creation of the GST Council Secretariat, with its office at New Delhi;
2. Appointment of the Secretary (Revenue) as the Ex-officio Secretary to the GST Council;
3. Inclusion of the Chairperson, Central Board of Excise and Customs (CBEC), as a permanent invitee (non-voting) to all proceedings of the GST Council;
4. Create one post of Additional Secretary to the GST Council in the GST Council Secretariat (at the level of Additional Secretary to the Government of India), and four posts of Commissioner in the GST Council Secretariat (at the level of Joint Secretary to the Government of India).

The Cabinet has also decided to provide for adequate funds for meeting the recurring and non recurring expenses of the GST Council Secretariat, the entire cost for which shall be borne by the Central Government. The GST Council Secretariat shall be manned by officers taken on deputation from both the Central and State Governments.

While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonised structure of goods and services tax and for the development of a harmonised national market for goods and services. The Goods and Services Tax Council shall determine the procedure in the performance of its functions.

It is important to note that decisions at the GSTC shall be taken only at the meeting with adequate quorum and properly distributed majority. Accordingly,

1. One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings.
2. Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:-

1. the vote of the Central Government shall have a weightage of one-third of the total votes cast, and
2. the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

All decisions taken in accordance with aforementioned principles shall be valid and no act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of-

(a) any vacancy in, or any defect in, the constitution of the Council, or

(b) any defect in the appointment of a person as a Member of the Council, or

(c) any procedural irregularity of the Council not affecting the merits of the case.

Fate of Empowerment Committee (EC)

The journey of GST in India so far was navigated till the present milestone of Constitution of GST Council on 12.09.2016 by the Empowered Committee of State Finance Ministers. The Empowered Committee has been instrumental in bringing all States on a common page and ensuring consensus on various complex issues on which there were divergent views. The Empowered Committee has been chaired by one of the State Finance Ministers and Empowered Committee has been chaired so far by Finance Ministers which include Finance Ministers of West Bengal, Bihar, J& K and Kerala. The present Chairman, Dr. Amit Mitra also comes from West Bengal.

Since GST Council is now an arm of the Constitution, duly constituted to carry out various functions in relation to proposed GST law, the Empowered Committee of State Finance Ministers will not be a forum to discuss or recommend anything in relation to GST. However, a decision to continue to have Empowered Committee or to dissolve it, may have to be decided by the Empowered Committee itself keeping in mind that there does not appear to be any need to have its existence at the moment, more so when the Constitution of GSTC includes almost all the members of the Empowered Committee. Further, the GST law may not recognize Empowered Committee at a body whose decisions are either recommendatory or binding on the GST authorities.