Bhaba Bhaya Hara Ratha, School of Law, CHRIST (Deemed to be University), Bengaluru
ABSTRACT
The Indian constitution is considered to be quasi-federal in nature as it has more unitary features. However, it has a clear distribution of legislative, administrative, and financial power between the center and the states, and through this distribution of power, it seeks to promote the concept of cooperative federalism. The introduction of the GST through the 101st amendment act, of 2016 was made on the lines of cooperative federalism to improve the center-state financial relationship. The GST was brought into the picture to overcome the problem of double taxation and to avoid the complexity of taxation that was levied by different states under different state tax codes. The introduction of GST can be seen as a major breakthrough that aims at making India a unified market with the objective of a one nation one tax system.
However, in recent times it has been observed that the new GST regime has adversely affected the center-state relationship. It has led the states to lose their financial autonomy and has also made the states more dependent on the center due to the compensation mechanism that was developed through this amendment. The paper focuses mainly on the dynamic relationship between the state and the center which is the basis of the federal structure of India, the issues and challenges before the GST regime, and provides solutions to overcome the challenges to make GST effective in the long run.
Keywords: Quasi-federal structure, Cooperative federalism, Center-state relationship, GST (goods and service tax), One-nation One tax.
