FEDERALISM VIS A VIS THE GST REGIME IN INDIA
Authored By- Kirti Sikdar
Institution : LLM, School of Law,
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The intergovernmental financial relationship between the centre and the states is very important in a federation. Efficient financing methods are required for good governance in any form of government. It has been a somewhat challenging process to finally implement the GST across the entire nation of India. On July 1, 2017, the Indian government enacted the GST regime under the the 101st Constitutional Amendment Act. The "GST Law" was enacted with the political and administrative purpose of preventing double taxation as well as tax on specific levies or taxes. In other words, the GST system strives to provide a uniform and fair tax structure across the country. It is critiqued in this paper that the GST system has failed for a variety of reasons. The hypothesis in this paper is that all the states in India will not be able to wholly accept the GST regime. Especially those states where the government is run by the parties other than the ruling party, there are chances of conflict. These states emphasise on the fact whether the "one-nation one-tax" concept contributes in strengthening the federal structure of India or not. In the case of at least those States where the state governments are controlled by political parties other than those at the centre, it is believed that the relationship between the centre and the states would remain strained. It is impossible to undervalue the significance of sound government. The paper's strongest point in terms of the dynamic connection between the Center and the States is the constitutional principle of federalism. In addition to discussing potential corrections and structural reforms that could be made to the GST regime, the objective of this paper is to emphasise on the growing concerns of the State Governments under its implementation.
Keywords: Centre - State Relationship, Federalism, Good Governance, GST, One - Nation One - Tax.
In place of a variety of other indirect taxes, such as the excise duty, VAT, various service taxes, etc., India has planned to adopt the Goods and Service Tax (GST). Through the One Hundred and First Amendment to the Constitution, the GST system was implemented in India through the Goods and Service Tax Act in 2017. This tax is imposed on the goods and services. "The GST is a comprehensive, multi-stage, destination-based tax imposed on every value addition and is a single domestic indirect tax for the entire country.1" It is referred to as comprehensive because, with the exception of a few significant taxes, it has now largely superseded all previous significant taxes. GST is a multi-stage tax that is imposed at all phases of production and sale. It is also a destination-based tax because it is imposed at the place of consumption rather than the point of origin. Under the GST system, the GST Council, comprising of the Finance Minister of India and other representatives from the states, is responsible for overseeing all tax rates, monitoring taxes, and managing laws and regulations. Even though the GST regime has proclaimed itself to be robust, many State governments and financial professionals have expressed their disapproval of its governance and execution. The GST regime has been assumed to recognise and uphold the supremacy of the so-called federalism, which is the main tenet of the Indian Constitution. However, recently several State Governments have banded together in opposition to the implemented GST regime in India. Why is it taking place? Is it only a political matter providing the opposition parties with yet another chance to smear the political party controlling the Central Government? The hypothesis of the author in this paper is that if the GST regime enacted by the government does not contribute in strengthening the federal structure of governance, the states, especially those that are run by parties other than the ruling party will not wholly accept the regime. There will always be conflicts regarding this matter. There would be a constant strain between the centre and the states.
According to the aforementioned supposition, the following objectives have been set for this paper:
1) To comprehend and research the scope of Goods and Service Tax, or GST, including its definition, nature and purpose.
2) To explain the concept of GST and point out the benefits, drawbacks, and philosophical flaws
that the system encountered when placing the taxing mechanisms in place.
3) To make a comparative study of similar systems in the USA and Europe and study the benefits of such tax systems.
1 GST Law; https://cleartax.in/s/gst-law-goods-and-services-tax, (Mar 10, 2021).
4) In order to influence Indian public law and public policy in favour of strengthening the Constitution, it is important to critically analyse the instances where the federal system has been reinforced by the implementation of one tax policy.
THE GOODS AND SERIVE TAX ACT OF 2017
The Indian Parliament passed the Goods and Service Tax Act, 2017, which came into effect across the country in 2016. On September 8, 2016, a number of States approved the GST Bill, and on that day, the President signed it into law under the 101st Constitutional Amendment Act of 2016. The Integrated Goods and Services Tax Act, 2017, the Central Goods and Services Tax Act, the Goods and Services Tax Act of each individual State, and the Union Territory Goods and Services Tax Act, 2017 were all passed by the Indian Parliament in addition to the GST Act, 2017, which governs the application, imposition, and distribution of taxes.
The GST Act, 2017, Section 3, outlines the administration of the tax system and the appointment of officers for administrative purposes. Section 5 of the act mentions the powers vested in these officers for the administration of the tax system.
The definition of the word "Supply" is provided in Section 7 of the Act. The term "supply" shall mean and include "all kinds of supply of goods or services or both made or agreed to be supplied for a consideration by a person in the conduct or furtherance of business, including but not limited to sale, transfer, barter, exchange, licence, rental, lease, or disposal."
Section 9 of the Act specifies how taxes will be levied and collected. The Act's appeals-related requirements are outlined in Section 107. If a person is not satisfied with the decision of the adjudicating authority, he/she can file for an appeal within a period of three months regarding the decision. The Revisional Authority's authority is further defined in Section 108.
The Appellate Tribunal's Benches and Constitution are covered in Section 109. This Section mandates that the Central Government establish the Goods and Service Tax Appellate Tribunal (GSTAT) based on the GST Council's suggestion in order to hear appeals from decisions made 4
by the Appellate or Revisional Authority. Within 180 days of the date of the Tribunal's order, Section 117 provides for appeals by the states or area benches to the High Courts. The appeal will be heard by at least two High Court judges, and the majority rule will apply to all judgments.
IMPACT OF THE GST REGIME
The introduction of the GST regime marked a significant shift in the Indian taxation structure. The main objective behind the government enacting the GST system was to avoid double taxation and to ensure that there was a free and transparent system of taxation all over the country. It aimed at ensuring that the distribution of funds from the centre to the states was equitable and transparent.
The GST system had some drawbacks while being implemented. A large number of financial experts and critiques have marked out the major drawbacks of the new GST regime in India. They have highlighted many errors in the technicalities and implementation process of the GST system. The World Bank criticised the Indian GST model in its 2018 report as being excessively complex, contrasting it with similar systems in other regions of the world.2 The GST system in India has a few positive aspects in it. The cascading effect of the tax system is attempted to be eliminated by the Indian GST system. Under the GST system, obtaining the input tax credit is simple. The impact of the tax on the consumer must be lessened as it falls and tumbles. The Government aims at ensuring that the common man or the common taxpayer of the country do not end up paying any additional taxes due to the lack of online tools and infrastructure under the new GST regime. All people are informed about the tax schemes and can efficiently comply with the rules thanks to simpler and enhanced internet facilities. All laws, policies, processes, rules, and regulations are harmonised by the GST system to produce a standardised and less complex taxing system for the entire nation. It was anticipated by the economists that after the implementation of the GST system, the price of the products would gradually start decreasing with time. This is mostly due to the introduction of a single GST in place of the previous VAT or excise taxes that applied to the product. Companies with annual revenues of less than Rs. 20 lakh are exempt from paying the GST, while those with annual revenues of up to Rs. 75 lakh are only required to pay 1% of the GST on their total revenue. This will enable the businesses to reduce their tax obligations and concentrate on expanding their operations without undue stress. Now looking at the negative implications of the GST system, the GST Act serves as an implicit shield to shield the Council, the GST Regulatory Body, from the judiciary's scrutiny. The drop in revenue collection is the main issue caused by the GST procedure's lack of implementation. The total economy of India has been affected by the reduction in tax rates. Because investors do not want to participate in a low capital market, the investment in the Indian market has consequently been considerably reduced.
2 Economic Times; https://economictimes.indiatimes.com, (Feb 10, 2021).
The State Government's reliance on the Central Government for revenue distribution is the primary flaw in this GST system. This is due in part to the GST rates fluctuating frequently and the absence of a sound financial system to control wealth distribution.
One of the major reasons for the failure of the new taxing system in India is the fact that there is no unanimity between the centre and the states. While the GST system's implementation has brought about a number of issues, the balancing of State interests has fallen short of expectations. Despite claims to the contrary from the Central Government, recent data and statistic releases do not back up the idea that the economy is expanding. The GST system lacks the commodity unification that was originally intended to constitute its core. Numerous items are excluded from the taxation plan and are not included in the GST taxing list. Products made of petrochemicals, fuel, alcoholic beverages for human use, dairy items, etc. Schedule III of the GST Act contains a list of these products.
THE GST REGIME AND FEDERALISM IN INDIA
The Constitution of India is federal in nature. A federal constitution is one that establishes a "dual polity," sometimes known as a "two-tier government." The Central Government and the State Government make up this entity. The Constitution lays out a plan for dividing and allocating the legislative, executive, and financial authority between the Central Government and the State Government. The Indian Constitution, however, does not adhere to and follow the rigid federal or conventional federal design. The Drafting Committee purposefully used the word "Union" rather than the phrase "federal" to signify two things. Firstly, there is no agreement amongst the States that led to the creation of the Indian Union and secondly, the States that make up the Union do not have the authority to break away from it. Despite possible divisions based on languages, cultures, and distinct States, the nation as a whole—its citizens living under a single imperium descended from a single source—remains one cohesive entity for administrative purposes.3 One of a federal system's most crucial and fundamental components is finance. All intergovernmental plans and transactions must be maintained with the proper distribution and separation of financial authorities. Each government must possess sufficient authority to raise funds on its own. Between the resources at the disposal of the government and the duties and powers granted to it, a proper balance must be kept.
3 Hinsa Virodhak Sangh v Mirzapur Moti Juresh Jamat; 2008 5 SCC 33; AIR 2008 SC 1892.
It is frequently observed that the Centre has greater financial clout than the several States, who are frequently left holding the bag in order to get their resources in order and fulfil the obligations placed upon them. To find a middle ground between the resources of both divisions, it is crucial to develop a plan for the distribution of wealth and resources from the Center to the States. The creators of our Constitution planned a system that would ensure a solid financial relationship between the Center and the State with the aforementioned considerations in mind.
The Indian Constitution envisions two key elements of the Indian financial system while making
sure that the shortcomings of other federal systems do not compromise the Indian framework. First, complete taxing authority separation between the Center and the State. Second, a sizable transfer of funds from the Center to the State. Additionally, there is no prohibition of "double taxation" in the Constitution. There is nothing in Article 265 that forbids the practise of double taxation.4 When a tax is imposed twice on the same tax base, it is referred to as double taxation, whether it is done so under the same name or a different one. The legislature has the authority to implement the required legislation if it so chooses.5 For taxes to be justified and valid, there must be a connection between the taxation subject matter and the legislative authority of the taxing authorities.6
The Indian Parliament passed the GST in a fashion that gave the Center and the State equal authority to impose taxes on goods and services. The GST was included as a new addition to the taxation authorities of the Centre and the State through the 101st Constitutional Amendment Act of 2016. These provisions were developed specifically for the inclusion of the GST. The 101st Constitutional Amendment Act of 2016 added Article 246A to the Constitution. This Article grants the Center and the State the authority to adopt their own legislation for the taxation of goods and services as well as the authority to levy, assess, and collect the taxes. To assess and collect taxes on interstate shipments, however, the Centre alone has the authority.7 With the passage of the IGST Act, the Center will have sole authority to handle these interstate shipments.
4 Article 265; No Tax shall be levied or collected except by the authority of the law. This bar is absolute, protecting
the citizens from any unlawful levy of taxes. Thus, a tax can only be collected by the executive only if there is a law
supporting the actions of the executive.
5 Jain Bros v UOI, AIR 1970 SC 778.
6 State of Karnataka v Drive-in Enterprise, AIR 2001 SC 1328.
7 “Amendment of Indian Constitution for GST”, Clear Tax, https://cleartax.in/s/constitution-amendmentgst#:~:
Particularly, Article 269A addresses the imposition and collection of the GST. This Article deals in detail with how each supply is distributed between the Center and the State. The Center will impose taxes on the import of the products and services since they are considered inter-State supplies.
According to this new Amendment, the States' rights to pass their own unique laws for the levying and collection of taxes are unaffected by the Union's residual powers. But prior to the Amendment, the Parliament had sole authority to create laws on matters not covered by the Concurrent List or the State list. The addition of Article 279A is the primary change to the taxing structure under the Amendment. The division of authority and duty between the State and the Center is attempted to be balanced in this article. It states that the President has the authority to convene and assemble the GST Council, which represents both the State and the Center. Any proposed change to that Council, however, must have the consent of at least 50% of the States in order to be implemented.
TAX REGIME IN THE EUROPEAN UNION
The fairness, effectiveness, and growth-friendly nature of the tax system is a goal that the European Union has continually pressed for. The collection, distribution, and expenditure of taxes by the government are not subject to any regulations from the European Union (EU). Each nation has the freedom and authority to enact its own unique tax laws, with the power to choose how to distribute the collected funds and no obligation to report their spending to the Union. This does not imply, however, that the EU has no responsibility for the member countries' tax policies.
It is astonishing that the countries in EU do not disadvantage disadvantage consumers, businesses, and employees from other EU countries in order to maintain good commerce and flow of goods and services. The EU establishes a structure to efficiently handle and combat concerns with cross-border taxes, fraud, and other tax-related issues. The "single market" tax policy is the one that applies to the entire European subcontinent. The free movement of goods and services across the continent in all of the EU countries is made possible by this taxation system. Thus, there are two main aspects to EU tax policy:
a) Direct Taxes:
All EU member nations are alone in charge of collecting direct taxes. The European Union strives to strike a balance between the need for a unified internal market and the national sovereignty of its Member States.8 Initially, any tax disparity that developed between the member nations was resolved in a way that maximised production across the board.9 The member nations hold the authority to enact direct taxes under the conditions that formed the European Union.
The tax system is built on the subsidiarity concept, which allows the EU to engage in the tax system only in situations where the basic goals are not being realised by the member countries independently. An extra mutual assistance directive allows tax authorities to cooperate with one another in the recovery of unpaid taxes.10 A replacement for the Recovery of Tax Claims Directive, Proposal for a Council Directive concerning mutual aid for the recovery of claims relating to taxes, duties, and other measures, Brussels, Belgium, has also been made by the Commission (Feb. 2, 2009).
The EU considered forimng a consolidated corporate tax base by reducing compliance costs with respect to cross-border activities. The objective was to improve the efficiency of the internal market and establish a business-friendly tax environment. In an effort to remove tax disparities across Member States, the CCCTB establishes a common tax base for all economic activity carried out by European groups. One of the earliest examples of "soft law" in the field of business taxation is the EU's Code of Conduct for Business Taxation. It makes an effort to end detrimental and unfair tax competition within the EU. The member nations are not required to abide by this Code. However, those who adhere to it must take steps to stop unfair tax competition and refrain from using similar taxing practises going forward.
b) Indirect Taxes:
The free flow of products and the freedom to offer services in the single market are both impacted by the implementation of indirect taxes. Both the product and the consumption are subject to these taxes. The tax is assessed as part of the final consumable cost and is paid on behalf of the government. The EU oversees and organises the implementation of excise taxes and the VAT (Value Added Tax) across the entire EU.
8 Tracy A. Kaye, Commentary Europe's Balancing Act: Trends in Taxation, 62 TAX L. REV. 193, 193 (2008).
9 EU (TAX COMPETITION IN EUROPE 4 (Wolfgang SchOn, ed., 2003).
10 Council Directive, 2008/55, 2008 O.J. (L150) 28 (Recovery of Tax Claims Directive).
The EU makes sure that the free flow of products and services between States is not hampered by fluctuating tax rates in one nation. It makes sure that differences in indirect taxes rates and processes that provide enterprises in one country an unfair advantage don't impede competition on the internal market.11 The EU's goal of creating an Economic and Monetary Union has come to pass. The EU charges VAT and excise taxes on a variety of goods. The tax known as VAT is imposed in direct proportion to the cost of the products or services. One of the EU's most extensive levies is the VAT. Additionally, it serves as the EU's primary source of income. The indirect taxes are being harmonised and combined by the EU. The European Commission Treaty Article 93, which states that "the Council is empowered to enact provisions for the harmonisation of laws affecting turnover taxes (VAT), excise charges, and other kinds of indirect taxation," serves as the legal foundation for such action. This means that any nation that disagrees with the European Council's plan is free to question its need. One of the main causes of this harmonisation is that a portion of indirect taxes go toward funding the European Commission.
The EU's imposes certain amount of tax on specific goods which generates a lot of revenue for the nation. The amount of these excise taxes varies depending on the country's economy as well as its culture, customs, consumer habits, etc.12 The goal of this excise duty harmonisation is to eliminate taxes that indirectly benefit domestic production.
TAX REGIME IN THE USA
Very similar to the tax system in India, the federal and local governments in the United States can tax the citizens at their levels. State and federal taxes are collected differently, and each government is free to choose its own taxing priorities. While controlling the taxing policies, total independence and autonomy between the two governments are preserved. The State Government's imposition of taxes is unaffected by the Federal Government.
Therefore, taxes are applied on both company and individual net income.13 The "tax accounting rule" is used to determine the income that will be taxed. One of the two nations that taxes non-residents' global income is the USA.
11 Indirect Taxes in the European Union, Lex Europa,
https://eur-lex.europa.eu/summary/chapter/taxation.html?root_default=SUM_1_CODED=21, (Mar 18, 2021).
12 Vladimir Tyc, Harmonization of indirect taxes in the European Union, 50 No 2 Intl J of Law and Management,
13 Taxation in the United States, Wikipedia; https://en.wikipedia.org (Mar 22, 2021).
In the case of Cook v. Tait14, the US Supreme Court likewise defended this type of taxes. Thus, taxes are levied to totally or partially finance government revenue. In the USA, the direct tax system is allocated in a way that ensures that the money is distributed among the States based on population. The US Constitution's Article 1, Section 2, Clause 3 requires that taxes be distributed in accordance with the population of each State. In Fernandez v. Wiener15, the court went on to define "direct tax" as the tax that the owner is subject to just by virtue of being the owner, independent of how he uses or disposes of the property. When consumers use the goods and services made available by others, they are required to pay indirect taxes. Although the consumer is ultimately liable for paying the tax, the intermediary, such as a salesperson or other service provider, is in charge of obtaining payment from the customer. Subnational levels levy indirect taxes.16 This indicates that each State is free to decide how much taxation to impose.
Every person may be subject to a range of indirect tax laws depending on the jurisdiction. Property taxes, excise taxes, business licence taxes, and other types of indirect taxes may be levied against individuals.
SUGGESTIONS AND RECOMMENDATIONS
The COVID-19 outbreak has made it clear that the GST's implementation procedure has been a failure. The states are not satisfied with the new GST system of taxation despite the Central Government's lofty pledges at the time the GST was introduced. The Center should make specific structural changes to the GST regime and its application in order to address the issue that States, particularly the States that are not governed by the BJP, are facing. Prior to anything else, the Centre needs to determine the tax rates and set them in stone—at least initially.
This action will clear up the complexity and chaos that have developed in the taxation system for both taxpayers and state governments. Tax collecting has to have a more straightforward system. Increasing tax rates is not a solution during such economic downturns. Instead, the Center should work to combine the various tax rates into a single rate in order to decrease and simplify the taxing system.
14 Cook v Tait, 265 U.S. 47 (1924).
15 Fernandez v. Wiener, 326 U.S. 340, 66,(1945).
16 KPMG; https://home.kpmg/xx/en/home/insights/2018/10/united-states-indirect-tax-guide.html, (Mar 15, 2021).
Numerous items and substances fall outside of the GST's purview. Petroleum, alcoholic beverages for human use, real estate, electricity, and other items are still excluded from the GST's application. This has a significant negative impact on government revenue as a whole and always has an impact on state governments. It is necessary to increase the States' borrowing capacity. Without the previous approval of the Center Government, States are not free to borrow money from the compensation cess above a minimal amount in times of crisis. This further limits the State Government's ability to keep up the State's governance and effective operation. During the COVID-19 pandemic, many States, including Chattisgarh, Assam, Tamil Nadu, Orissa, had to stop with their social welfare programmes due to inadequacy in the funds and resources. To ensure that the funds owed to the States from the taxes collected under various heads are paid in advance and that no balance or discrepancy is maintained, it is necessary for the Centre and the State Government to work together in a coordinated manner. For the tax regime to be implemented effectively, there must be a relationship of trust between the federal government and the state governments.
Federalism's constitutional principles must be upheld. The States are also responsible to the Centre for all of the Centre's acts. The division of powers between the Union and the States is a fundamental tenet of federalism, although the Centre does not have unrestricted authority to act. The Centre is accountable for making sure the States have access to sufficient funding so they can fulfil their constitutional duties and obligations. The Centre must also take action and support the State Government in any challenges or difficulties it may encounter.
In India, through the One Hundred and First Amendment to the Constitution, the Goods and Service Tax Act of 2017 brought the GST system to India. "The GST is a comprehensive, multi-stage, destination-based tax imposed on every value addition and is a single domestic indirect tax for the entire country."17
GST is categorised as a "indirect tax." A tax that is collected indirectly from the party who will ultimately suffer its financial burden is referred to as an indirect tax. With the exception of the final step of purchase, it is a multi-stage tax that is imposed at all phases of production and sale.
17 Goods & Services Tax GST (India) What is GST? Indirect Tax Law Explained, ClearTax,
https://cleartax.in/s/gst-law-goods-and-services-tax, (Mar 18, 2021).
It is also a destination-based tax because it is gathered at the point of consumption rather than the site of origin.
India, a Federation, has chosen for the dual GST approach. This concept calls for the central and state governments to jointly manage the tax. The Central GST (CGST) and State GST both regulate sales and purchase transactions that take place within a State (SGST). A unique Inter-State GST (IGST) is levied by the Central Government for all Inter-State transactions as well as for the import and export of products. The Indian government enacted the adjustments to the GST, and they listed the advantages of the system as the removal of cascading tax effects, regulation of the unorganised sector, development of a consistent tax structure, etc. The Goods and Service Tax Act, 2017, was approved by the Indian Parliament in 2016 and is in effect throughout the whole country, with the exception of the State of Jammu and Kashmir. On September 8, 2016, a number of States approved the GST Bill, and on that day, the President signed it into law as the 101st Constitutional Amendment Act of 2016. In addition, the Indian Parliament passed four additional Acts that fall under the ambit of the GST Act, 2017, to regulate how taxes are collected, applied, and the money raised by these taxes is distributed.
One of a federal system's most crucial and fundamental components is finance. All intergovernmental programmes and transactions must be maintained with the proper distribution and division of financial authorities. Each government must possess sufficient authority to raise funds on its own.
Between the resources at the disposal of the government and the duties and powers granted to it, a proper balance must be kept. The Union and State lists in the Constitution have a complex taxing system that grants the Center and the State, respectively, exclusive taxing authority. Local taxes are allocated to the State, whereas taxes covering many States or that can be imposed uniformly across the entire nation are allocated to the Centre. This prevents confusion between the Center and the State and the proliferation of taxes. In contrast to the GST system in India, the European Union has continuously emphasised the need for a fair, effective, and growth-friendly tax structure. The collection, distribution, and expenditure of taxes by the government are not subject to any regulations from the European Union (EU). Each nation has the freedom and authority to implement its own unique tax laws, with the power to choose how to distribute the collected funds and no obligation to report their spending to the Union. The EU establishes a structure to efficiently handle and combat concerns with cross-border taxes, fraud, and other tax-related issues. The "single market" tax policy is the one that applies to the entire European subcontinent. In the United States, the government can impose taxes at the federal and local levels just like the tax system in India. State and federal taxes are collected differently, and each government is free to choose its own taxing priorities. While controlling the taxing policies, total independence and autonomy between the two governments are preserved. The State Government's imposition of taxes is unaffected by the Federal Government.
As a result, taxes are levied against both company and individual net income53. The "tax accounting rule" is used to determine the income that will be taxed. One of the two nations that taxes non-residents' global income is the USA. The US Supreme Court also backed this type of taxation.
Certain States have also struggled with the Indian GST system. The fact that the GST is a "consumption tax," meaning that the consuming State benefits at the expense of the manufacturing State, is a significant issue that pinches some States. All States are entitled to compensation from the Center for any losses they sustain in the first few years after the GST's introduction. However, it is clear that the Centre has been putting off paying the States' debts for a number of reasons. States is that in addition to being compelled to give up their taxation authority to the Center, they were also forced to jeopardise future revenue in order to make up for the current revenue shortfall that was supposed to be covered by the Center. Furthermore, under the so-called "one nation, one tax" system, the Centre will not be responsible for the cost of recovering the State's economy as a result of the Center's flawed implementation process. The Centre should make specific adjustments and modify the GST implementation in order to address the issues currently being experienced by the States. Finally, it is necessary to uphold the constitutional principles of federalism. The States are also responsible to the Centre for all of the Centre's acts. The separation of powers between the Union and the States is a fundamental tenet of federalism, but it does not provide the Centre complete freedom to act however it pleases. The Centre is accountable for making sure the States have access to sufficient funding so they can fulfil their constitutional duties and commitments.
1. Mason, R. (2011). Federalism and the Taxing Power. California Law Review, 99(4), 975–1035. http://www.jstor.org/stable/23018617
Scholars and judges agree that the federal government extends its authority beyond what the Constitution specifically grants it by enlisting state cooperation in achieving federal objectives. The federal government, however, may accomplish comparable goals. In order to clarify the parallel federalism difficulties posed by extensive use of the taxing power, this article draws on the spending power literature. A federal form of tax regulation limits the regulatory competition between both the centre and the states. However, this article also reveals significant distinctions between taxes and grants, suggesting that the threat posed by federal tax control is less severe than that posed by conditional transfers to the states. For instance, states may have more freedom under tax incentives than grants to enact concurrent or opposing policies because federal tax incentives do not contractually obligate states to follow federal policy or use state legislative and administrative resources in enacting and enforcing federal policy.
2. Kumar, Y. S. S. (2012). India’s Taxation Regime: Perspectives on the Proposed Changes. National Law School of India Review, 23(2), 28–43.
When India abandoned her former complex and ineffective tax framework to adopt the long-awaited Goods and Services Tax, her resolve to implement desperately needed fiscal changes was largely praised at face value (GST). It has been an important economic step since independence, and after its implementation, fact-checking is necessary. In light of the innovation implementation theoretical perspective, the current study aims to present a general macroeconomic analysis of the extent to which the implementation of GST has improved current tax administration and the ensuing general economic well-being of a democratic political economy like India. The study also looked at how the stakeholders felt about such sweeping reform three years after it was implemented.
3. Prassana, A. K. (2016). Goods and Services Tax: An Exercise in “Controlled Federalism”? Economic and Political Weekly, 51(34), 10–11. http://www.jstor.org/stable/4400460
Despite the union government's repeated affirmations of its dedication to "cooperative federalism," its involvement in the meddling with and destabilisation of opposition-ruled governments in Arunachal Pradesh, Uttarakhand, and Delhi raises doubts about this commitment. Aside from these specific examples, the recently established Goods and Services Tax Council's framework appears to lay the institutional groundwork for further federalism by the union by encouraging cooperative federalism, particularly in areas involving state fiscal policy.
4. Transcript of the IX NLSIR Symposium on “Goods and Services Tax: The Changing Face of Fiscal Federalism in India.” (2016). National Law School of India Review, 28(2), 143–162. http://www.jstor.org/stable/26201831
There have been numerous attempts to apply VAT in India during the past few years. At first, all states were supposed to switch to the VAT system by the year 2000, however administrative issues and worries about how the shift would affect income caused the implementation to be put off. In the previous five years, it has been postponed five times. In fact, implementing a full-fledged VAT in India appears to present a myriad of administrative and legal challenges, including the complex issue of union-state relations. Additionally, there are paradoxical aspects to the VAT implementation in India within the context of economic changes. On the one hand, economic reforms have increased the decentralisation of expenditure obligations, which calls for more decentralisation of revenue-raising authority in order to maintain fiscal accountability. However, the implementation of the VAT could also result in the states losing their autonomy, which would increase centralization in addition to their revenue losses. Therefore, it is necessary to create a "federal-friendly" VAT model that can be adopted in India without compromising federal ideals, together with an appropriate compensation package.
5. Deshmukh, A.K., “Goods and Services Tax (GST) Implementation in India.”(2022) GFSM Journal; 23(2): 165–183.
Using a case-based qualitative investigation, the study aimed to determine how much the implementation of GST had, in fact, affected the economy in general and people and/or consumers in particular. The situation-actor-process; learning-action-performance analytical framework was used in the current study to analyse cases. Facts show that India has had a significant rise in its tax base relative to revenue collection. The low tax to GDP ratio, the skewed GST payer base, the negative stakeholder perception of the GST (found through Twitter sentiment analysis), and the evil of tax evasion all call for some improvement, though. The economy's other achievements are listed as advantages for consumers, MSMEs, an improved ranking for ease of doing business, and support for make-in-India and the Aatmanirbhar Bharat initiative by the government.