Many Indias, Many Taxes?

Or, is it a classic case of much ado about nothing? Experts say that the debate on the very survival of GST stirred by the Supreme Court's observation is unfounded, as come what may, the One Nation, One Tax regime is here to stay

- Manish Pant, Rajat Mishra And Rahul Oberoi

FOR STARTERS, it wasn't even a judgement but an observation made by the Justice D.Y. Chandrachud-led Supreme Court (SC) bench while dismissing the central government's appeal challenging a Gujarat High Court ruling that termed integrated GST (IGST) on ocean freight as unconstitutional. On May 19, the apex court bench remarked that the recommendations of the GST Council are persuasive in nature and, thus, not binding on the centre and the states. The remarks were made while delivering a verdict in the Union of India vs. Mohit Minerals case.

It is not imperative that one of the federal units must always possess a higher share in the power for the federal units to make decisions. Indian federalism is a dialogue between cooperative and uncooperative federalism where the federal units are at liberty to use different means of persuasion ranging from collaboration to contestation, the bench wrote in its judgement. The SC upheld the Gujarat High Court's ruling that no IGST is payable on ocean freight under the reverse charge mechanism (RCM) on cost, insurance and freight (CIF) contracts for import of goods by Indian importers since IGST is payable only on a composite supply of goods.

Within minutes of the preliminary details of the judgement emerging, an intense debate started in many quarters. Warning bells were sounded that the judgement would wreck the very foundation of the GST regime and a situation of Many Indias, Many Taxes would arise. It was said that the judgement would enable the centre and states to charge different levies once the GST compensation provided by the centre expired on June 30.