GST Council's Recommendations Not Binding On States, Union, Only Persuasive Value: Supreme Court

The Supreme Court on Thursday, in a significant verdict, ruled that the recommendations of the Goods and Services Tax (GST) council are not binding on the Union and the State Governments. 

A bench led by Justice DY Chandrachud ordered that the Parliament intended for the recommendations of the GST Council to have persuasive value at best and not be binding.

The top court said that the Centre and states could equally legislate GST matters and emphasised the importance of the principles of "cooperative federalism."

The bench pointed out that there are no provisions in the GST Act of 2017 that deal with repugnancy between the laws drawn up by the Centre and State and it is for the council to advise them suitably whenever such occasions come to fore.

The top court ruling came on a batch of pleas as it upheld a Gujarat High Court verdict to quash the levy of Integrated GST (IGST) on the importers on ocean freight under reverse charge.

The High Court had held that no tax can be levied under the IGST on the ocean freight for the services provided by a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station in India.

It had quashed the 2017 notification of the Centre by which IGST of five per cent would be levied on the services of transport of goods in a vessel.