BPSC 70th CCE Re-exam Prelims General Studies · Question 59 of 142

Correct — B, Union Finance Minister. This is not a matter of practice or convention; the Constitution says it in as many words. Article 279A, inserted by the Constitution (One Hundred and First Amendment) Act, 2016 with effect from 12 September 2016, provides in clause (2): 'The Goods and Services Tax Council shall consist of the following members, namely:— (a) the Union Finance Minister — Chairperson; (b) the Union Minister of State in charge of Revenue or Finance — Member; (c) the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government — Members.' The Chairperson is therefore fixed by the Constitution and changes only when the finance portfolio changes hands. Clause (3) adds the balancing provision: the State ministers choose one from among themselves as Vice-Chairperson, so the Union holds the chair and the States hold the deputy chair. The design continues into how the Council votes, which is where its real character lies. Under clause (9) every decision needs not less than three-fourths of the weighted votes of the members present and voting, with the Central Government's vote weighted at one-third of the total cast and the votes of all State Governments together at two-thirds. The Centre alone cannot carry a decision and the States alone cannot carry one either — each side needs the other. Clause (7) fixes the quorum at one-half of the total members. This is why the GST Council is described as the working model of cooperative fiscal federalism in India.

• (a)Chairman of Finance Commission — A different constitutional body doing a different job. Under Article 280 the President constitutes a Finance Commission within two years of the commencement of the Constitution and thereafter every fifth year, consisting of a Chairman and four other members, and its duty is to recommend how the net proceeds of divisible taxes are shared between the Union and the States and what principles should govern grants-in-aid. It advises on distributing revenue after it is collected; it has no role in deciding what is taxed or at what rate, and no seat on the GST Council.
• (c)Union Minister of Corporate Affairs — Not a member of the Council at all. Article 279A(2) names exactly three categories — the Union Finance Minister, the Union Minister of State for Revenue or Finance, and one minister from each State — and Corporate Affairs is none of them. The portfolio administers company law through the Ministry of Corporate Affairs and the National Company Law Tribunal, which is regulatory work, not tax policy.
• (d)RBI Governor — The Governor of the Reserve Bank chairs a different committee altogether — the Monetary Policy Committee, which sets the policy interest rate — and has no seat on the GST Council. The confusion is worth naming: monetary policy is the RBI's, fiscal and tax policy is the government's, and GST rates are decided by ministers accountable to legislatures, not by a central banker.

Before 1 July 2017 the power to tax goods and services in India was split. The Union levied central excise on manufacture and service tax on services; the States levied VAT or sales tax on sale, plus entry tax, octroi, luxury tax and entertainment tax. The Goods and Services Tax merged most of that into a single destination-based tax on supply, which required both the Union and every State to surrender part of their taxing power simultaneously. No ordinary body could manage that, so the 101st Amendment created a constitutional forum in which the two levels sit together and take joint decisions — the GST Council under Article 279A. Its recommendations cover which taxes are subsumed, which goods and services are exempt, the model GST laws and place-of-supply principles, the threshold turnover for exemption, the rates including floor rates with bands, special rates during a natural calamity, and special provisions for eleven named hill and north-eastern States. Article 279A(5) leaves one large question open: the Council must recommend the date from which GST will be levied on petroleum crude, high speed diesel, petrol, natural gas and aviation turbine fuel — the five products that remain outside the tax in practice.

The elimination here is quick if you sort the four names by which sphere of government they belong to. Tax rates are set by elected ministers answerable to legislatures, so a central banker (option d) is out on principle before any article is recalled. A commission that advises on *sharing* revenue (option a) is out because the Council decides how revenue is *raised*. Corporate Affairs (option c) does company regulation, not taxation. That leaves the finance minister, which is also the answer common sense would reach: the GST Council is a meeting of finance ministers, so the Union's finance minister chairs it. The fact worth adding for the harder version of this question is the voting rule — one-third weight to the Centre, two-thirds to all States together, and a three-fourths majority of weighted votes required — because that is what examiners move on to once the chairmanship is too easy.

• Article 279A(2) verbatim: 'the Union Finance Minister — Chairperson; the Union Minister of State in charge of Revenue or Finance — Member; the Minister in charge of Finance or Taxation or any other Minister nominated by each State Government — Members.'
• Article 279A was inserted by the Constitution (One Hundred and First Amendment) Act, 2016 with effect from 12 September 2016, and clause (1) required the President to constitute the Council within sixty days of that commencement.
• Voting under Article 279A(9): decisions need at least three-fourths of the weighted votes of members present and voting; the Centre's vote carries one-third of the weight and all States together carry two-thirds. Quorum under clause (7) is one-half of the total members.
• The Vice-Chairperson is chosen by the State ministers from among themselves under Article 279A(3) — the Union chairs, the States nominate the deputy.
• Article 279A(5) requires the Council to recommend the date from which GST is levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel; Article 280 separately governs the Finance Commission, a Chairman and four members appointed every fifth year.

• Mixing up the Finance Commission with the GST Council. One divides revenue between the Union and the States under Article 280; the other decides what is taxed and at what rate under Article 279A.
• Assuming the Centre can carry a GST Council decision alone. Its vote weight is one-third and a decision needs three-fourths of weighted votes, so the Union and the States are each given a veto by arithmetic.
• Thinking petroleum products are constitutionally outside GST. They are inside the definition; only the date of levy is pending a Council recommendation under Article 279A(5). Alcoholic liquor is the one true carve-out, and that is done by the definition in Article 366(12A).

BPSC asks for the office by name and puts three other well-known offices beside it, so the item is decided by whether you can attach a body to its Article. UPSC prefers the machinery: what the Council may recommend, how its votes are weighted, or which body performs a named function in Centre-State finance — the same discrimination this question makes between the GST Council and the Finance Commission.

• practice — not a real PYQ

  Under Article 279A, a decision of the GST Council requires the support of

  • (a)A simple majority of members present and voting
  • (b)Two-thirds of the members present and voting
  • (c)Not less than three-fourths of the weighted votes of members present and voting
  • (d)The unanimous consent of all States

  Answer(c) Not less than three-fourths of the weighted votes of members present and voting — with the Centre's vote weighted one-third and all States together two-thirds, so neither side can decide alone.

• practice — not a real PYQ

  The Vice-Chairperson of the GST Council is

  • (a)The Union Minister of State for Finance, ex officio
  • (b)Chosen by the State ministers from among themselves
  • (c)Appointed by the President on the advice of the Prime Minister
  • (d)The Revenue Secretary of the Government of India

  Answer(b) Chosen by the State ministers from among themselves — Article 279A(3), the counterweight to the Union Finance Minister holding the chair.