composition and functions of the GST Council under the 122nd Constitution Amendment Bill

The 122nd Constitution Amendment Bill related to changing the Constitution for the introduction of GST seeks to set up a GST Council. The relevant provisions are the following:

The President must constitute a Goods and Services Tax Council within sixty days of this Act coming into force. The GST Council aims to develop a harmonized national market of goods and services.

Composition of the GST Council: The GST Council is to consist of: (i) the Union Finance Minister (as Chairman), (ii) the Union Minister of State in charge of Revenue or Finance, and (iii) the Minister in charge of Finance or Taxation or any other, nominated by each state government.

Functions of the GST Council: These include making recommendations on: (i) taxes, cesses, and surcharges levied by the centre, states and local bodies which may be subsumed in the GST; (ii) goods and services which may be subjected to or exempted from GST; (iii) model GST laws, principles of levy, apportionment of IGST and principles that govern the place of supply; (iv) the threshold limit of turnover below which goods and services may be exempted from GST; (v) rates including floor rates with bands of GST; (vi) special rates to raise additional resources during any natural calamity; (vii) special provision with respect to Arunachal Pradesh, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and (viii) any other matters.

The GST Council may decide upon the modalities for the resolution of disputes arising out of its recommendations.
Compensation to states will be determined by Parliament for revenue losses arising out of the implementation of the GST, on the GST Council’s recommendations. This would be up to a five year period.

GST Council is to decide when GST would be levied on: (i) petroleum crude, (ii) high speed diesel, (iii) motor spirit (petrol), (iv) natural gas, and (v) aviation turbine fuel.

The Council is federal in composition as can be seen above. It is also federal in that compensation matters are left to it. Also, disputes settlement matters. Further, when petrol and related products will be brought into GST base will be decided by the Council.