It has given both the central government and states simultaneous powers to legislate on taxes.
On May 19, in a major judgment, the Supreme Court held that the recommendations of the Goods and Services Tax Council would not be binding on the centre and the states. The council fixes GST rates and its recommendations were considered binding until now.
The ruling could have far-reaching implications for the “one nation, one tax” regime that was introduced in July 2017 when the GST was launched to subsume all indirect taxes collected by the centre and the states.
While acknowledging that its judgment might throw open some challenges, with states passing laws that contradict the central law, the Supreme Court said that is desirable as “Indian federalism is a dialogue between cooperative and uncooperative federalism”.
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