GST Council recommendations not binding on states and Centre: Supreme Court

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Supreme Court has held that recommendations by the Goods and Services Tax (GST) Council are not binding on states or the Centre and hold a persuasive value.

The parliament as well as state legislatures possess equal and simultaneous powers to legislate on GST and the Council can advise suitably in the event of repugnancy between laws laid down by the two federal units, the court said. In such events, "GST Council must work in harmonious manner to achieve workable solution," the bench added.

The court added that the provisions under Articles 246A and 279 indicate that states and centre have equal powers to legislate on taxation matters and cannot act independently of one another. The provisions highlight competitive federalism, the bench added.

While pronouncing the judgment, the Supreme Court bench headed by DY Chandrachud said that the recommendations of the Council result from a collaborative process and discussions.

The principles of co-operative federalism have been highlighted by the court in this ruling.

The court's ruling came on an appeal against the decision of Gujarat High Court pertaining to levying tax on ocean freight under the Integrated Goods and Services Tax (IGST) Act, 2007.

The high court had quashed a 2017 notification of the government which provided for 5% IGST to be levied on services of transport of goods in a vessel. The high court's judgment was upheld by the Supreme Court today.