Supreme Court has not altered fundamental features of GST, says finance minister

FM Nirmala Sitharaman

The Supreme Court in a recent ruling has not set aside or altered the fundamental features of the Goods and Services Tax (GST), finance minister Nirmala Sitharaman wrote in an article July 1 as the indirect tax system completes five years of implementation.

In a May 19 ruling, the apex court had said that recommendations by the GST Council are not binding on states or the Centre and hold a persuasive value.

“Since its introduction, GST has naturally faced teething problems. But, it has emerged strongly after facing turbulence from the Covid-19 global pandemic and its fallout,” Sitharaman wrote in The Indian Express. “It is to the credit of the GST Council that the Centre and the states held each other’s hand to not just face the crisis but to lift our economy onto the path of recovery.”

The finance minister said that the average GST monthly collections have increased to Rs 1.24 lakh crore in 2021-22 from Rs 1.04 lakh crore in 2020-21.

In the first two months of this year, the average collections are Rs 1.55 lakh crore, she said, adding that “it is reasonable and fair expectation that this steady increasing trend will continue".

Sitharaman cited former West Bengal finance minister Asim Dasgupta, who was the chairperson of the Empowered Group of State Finance Ministers from 2000-2011, as saying that the GST Council is a recommendatory body to the Parliament for central GST and to assemblies for the state GST.

Some states have raised concerns over the loss of their right to tax under GST, especially as the GST compensation ending on June 30 this year will hit their finances.

Nearly a dozen states demanded at the GST Council meeting earlier this week that the GST compensation be extended by five years.

As many as 16 states spoke on GST compensation at the meeting, Finance Minister Nirmala Sitharaman had said earlier, of which 3-4 states said that they have to stand on their own and not depend on compensation.