Vol. 2, Issue 6 (2017)
GST & cooperative federation: Through the eyes of Indian constitution
Author(s): Rakesh Chandra
Abstract: India as a nation has achieved Political Integration in 1950's with the integration of Princely States in Indian Union. Passing of Goods and Services Tax through 101st Constitutional Amendment has paved the way for economic integration of the country. In doing so, States and Centre have ceded their power to tax and come up with a single Tax system to realize, the dream of one Economic India with 'One Market'. In our Federal System both Centre and States have power to impose taxes. The division of such taxation powers is given in Union and State List under 7th schedule. Part XII of the Indian Constitution contains detail provisions in this regard. However, the Constitution of India has now been amended and this fundamental reordering of federal fiscal relations for the cause of common good shows the strength and resolve of the federal structure. This convergence for the cause of larger public good has been made possible, initially, due to the mechanism of the Empowered Committee of Ministers and later the GST Council. Under the GST regime, the Centre & States will act on the recommendation of the GST Council which comprises of the Union Finance Minister, Union M.O.S. for Finance and all Finance Ministers of the States. 2/3 of voting power is with the States and 1/3 with the Centre which reflects the accommodative spirit of federalism. However, Constitution still provides room for states to levy tariff and non-tariff barriers. Article 302 gives Parliament the power to restrict free trade between and within states one grounds of public interest. Similarly, Article 304 (b) allows state legislatures to restrict trade and commerce on ground of public interest. Lastly, GST is a long awaited reform in the tax-structure prevailing in the country which should be given enough room to prove its mettle.