GST GOVERNANCE AND FISCAL FEDERALISM IN INDIA: A CRITICAL STUDY OF COOPERATIVE TAX ADMINISTRATION AFTER THE 101st CONSTITUTIONAL AMENDMENT

The passage of the Constitution (One Hundred and First Amendment) Act, 2016, followed by the introduction of the Goods and Services Tax (GST) regime in 2017, is considered among the most important financial reforms undertaken in independent India. Envisioned under the slogan “One Nation, One Tax,” the GST was intended to move away from the complex system of indirect taxes and towards a more uniform, destination-based tax system. Although GST was intended mainly as a financial measure to ease taxation and ensure the formation of a national market, it also resulted in major constitutional changes. The present work seeks to critically analyse GST governance along with its impact on fiscal federalism in India post the 101st Constitutional Amendment. It will seek to assess how the introduction of the power of concurrent taxation and the creation of the GST council as an administrative body to manage indirect taxes have led to a constitutional change within India. The study attempts to examine whether the GST regime has indeed led to cooperative federalism in India via collaborative decision-making, or whether it has merely made fiscal federalism weaker. Emphasis will be laid on the voting system at the GST council, the constitutionality of GST compensation provisions and the dependency of States on the Central Government for finances. In addition, the research analyses the conflicts that arose amid the outbreak of the novel coronavirus disease, specifically concerning delayed disbursements of compensation money, along with discussing critical judgments, particularly in the landmark case of Union of India v. Mohit Minerals Pvt. Ltd., where the apex court clarified that recommendations of the GST Council are non-binding in nature, thus reinforcing the federal nature of the Constitution. With the aid of a doctrinal and analytical methodology, this paper seeks to demonstrate that, although GST has made a significant contribution to achieving economic harmony and operational effectiveness, it has also significantly reduced the degree of fiscal independence enjoyed by the States.