Post-GST Fiscal Federalism In India: Between Constitutional Aspiration And Institutional Reality: A Structural Critique And Reform Agenda
- IJLLR Journal
- May 9
- 2 min read
Kartik Chauhan, The ICFAI University
Prof. (Dr.) Arun Kumar Singh, The ICFAI University
ABSTRACT
Of the many structural transformations wrought upon India’s constitutional order since the adoption of the Constitution in 1950, the Constitution (One Hundred and First Amendment) Act, 2016 stands apart for the breadth of its fiscal implications. By inserting Articles 246A, 269A, and 279A into the constitutional text-simultaneously vesting concurrent legislative competence over goods and services tax in both Parliament and State Legislatures, establishing a fresh constitutional mechanism for inter-State revenue sharing, and bringing into existence the Goods and Services Tax Council, the Amendment undertook a comprehensive reorganization of India’s indirect tax architecture. The guiding constitutional logic was unambiguous: the Union and States, operating as co-architects of a unified national tax system through an institutionalized inter-governmental forum, would together govern the GST regime while preserving each tier’s constitutional identity and fiscal integrity.
What has emerged over seven years of operation, however, tells a more complicated story. Drawing upon doctrinal constitutional analysis, empirical data from GST’s implementation record, and the Supreme Court’s pivotal ruling in Mohit Minerals Pvt. Ltd v Union of India ((2022) 9 SCC 650), this article contends that the GST Council’s structural features -weighted voting tilted heavily toward the Centre, a secretariat housed within the Union Ministry of Finance, and near-exclusive agenda-setting power vested in the Central executive -have produced conditions characteristic of coercive rather than cooperative federalism. Three constitutional pathologies are identified: the systematic erosion of State fiscal autonomy through the substitution of genuine legislative power with entitlement-based receipts; the structural unraveling of the GST compensation mechanism, which culminated in a fiscal crisis during the COVID-19 emergency and the constitutionally questionable extension of the cess beyond June 2022; and the worsening of both vertical and horizontal fiscal imbalances across the federation. Comparative perspectives from Australia, Canada, and Germany inform a structured reform agenda spanning constitutional amendments, legislative revisions, and institutional restructuring directed at restoring the cooperative federal balance the Amendment was designed to achieve.
Keywords: Fiscal Federalism · GST Council · Cooperative Federalism · Article 279A · Mohit Minerals · Centre–State Relations · Constitutional Amendment.
