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GST: A New Mechanism To Resolve Centre-State Dispute In the Works; Details Here

The upcoming GST Council meet, which is likely to take place this month, might see a discussion on a mechanism that can resolve GST disputes raised by states, according to an ET report. It added that the finance ministry is currently working on the mechanism.

The plan, which comes after the recent Supreme Court ruling that GST Council recommendations are not binding on the states or the Centre, includes a dispute redressal bench. The bench will have representation from states, the Centre, and independent law and tax experts well versed in legal and economic implications. There will be detailed guidelines on which cases can be referred to such a process.

“We are working on the procedures of the dispute resolution mechanism, which some of the states have been demanding… This is under discussion. Once the draft is ready, we will take it up to the council, which will take the final call,” said the report quoting an official.

The Centre May 31 said it has released the entire amount of GST compensation to states, which was due up to May 31, 2022. In a statement, the finance ministry said the government has released an amount of Rs 86,912 crore to the states as part of the GST compensation dues.
How Disputes Are Resolved Currently?

The GST Council usually sets up groups of ministers (GoMs) to address differences among states. In the past five years since the GST was implemented in 2017, most of the differences have been resolved through the existing system.

Last year, the Council had also set up a panel of state ministers, headed by Karnataka Chief Minister Basavaraj Bommai, to suggest ways to augment revenue by rationalising tax rates and correcting anomalies in the tax structure. It is likely to finalise its recommendations by early next month, which will be placed before the Council in its next meeting, likely by mid-May, for a final decision.
Supreme Court Ruling on GST Council Recommendations

The government last month held that the recommendations of the GST Council will have a persuasive value. The Court also held that both Parliament and the state legislatures can equally legislate on the matters related to GST. It said the GST Council is only a recommendatory body and its recommendations are not binding on the Centre or states.

Experts said it is likely to give fresh force to the debate on the financial independence of the states and the importance of cooperative federalism for the success of GST.
GST Collections In May

The GST collections in May stood at Rs 1,40,885 crore, an increase of 44 per cent in respect to the year-on-year basis. However, this is a drop of 16 per cent as compared to the GST collections in April. The gross GST revenue collected in the month of May 2022 is Rs 1,40,885 crore of which CGST is Rs 25,036 crore, SGST is Rs 32,001 crore, IGST is Rs 73,345 crore (including Rs 37,469 crore collected on import of goods) and cess is Rs 10,502 crore (including Rs 931 crore collected on import of goods).

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