Decisions of the GST Implementation Council must be approved by the GST Council reiterated the Punjab Finance Minister Manpreet Singh Badal in a letter to Union Finance Minister Nirmala Sitharaman on Wednesday.

Badal said despite some support from other States, Punjab’s observations in the last meeting on the issue were not well received and the discussions that followed were tangential and inconclusive.

Urging Sitharaman to consider the issue seriously, he said the power of the Central and State governments to make rules in respect of GST is contained in Section 164 of the respective GST Laws and Section 22 of the IGST Law.

“It is imperative to understand that recommendations of the GIC, even those that are endorsed by the Law Committee — which is comprised merely of officers and not elected representatives do not amount to recommendations of the GST Council. This crucial distinction must be acknowledged with a supplementary acceptance of the fact that there is a prescribed procedure for decision-making by the Council which cannot be circumvented in any manner without creating conflict with the law on the subject,” he added in the letter.

‘Advisory role’

Badal said details of how many officers are represented on the respective committees and which States they hail from are entirely immaterial. “Even if every State were represented on an officers’ committee, the body in question could by no means act as an equivalent or substitute of the GSTC. Attempting to do so would inherently involve ignoring fundamental legal requirements. The opinions of these committees are hence only advisory, and not legally binding. By failing to obtain the approval of the Council, we have subjected all the rules made on the basis of recommendations of the GIC to judicial review with the risk of being declared ultra vires ,” he added.

He reminded the Finance Minister that jurisprudential tradition of the country ensures that rules cannot be used for restraining the rights of taxpayers and imposing additional fetters of a substantial nature. “There is significant precedence of courts striking down such provisions on grounds of ‘excessive delegation’. If it is resolved that such provisions are required, they must be implemented through the process of legislation,” he added.

He said the decisions of GIC must be retrospectively approved by the GST Council in order to ensure that they are absolved of any legal liability and able to withstand possible judicial challenges. “I would be happy to stand corrected if an opinion of the Law Ministry or the AG is taken and proves contrary to my line of logic,” Badal added.

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