Examine the role of the GST Council as a model of cooperative federalism. What are the fault lines that have emerged over compensation, rate-setting, and revenue sharing?

Article 279A, inserted by the Constitution (101st Amendment) Act, 2016, created the GST Council — India's only constitutional body where the Union and States pool sovereignty over taxation [1]. Nine years on, it has delivered procedurally, but its federal foundations are showing strain.

The Council as a cooperative federalism model

• Pooled sovereignty: Article 246A gives Union and States concurrent taxing power; the Council, chaired by the Union Finance Minister with every State Finance Minister as member, is the joint forum for exercising it [1].
• Built-in parity: decisions need a three-fourths majority, with the Centre holding one-third of the weight and States together two-thirds — neither side can act unilaterally [1].
• Consensus convention: the overwhelming majority of decisions across its meetings have been taken by consensus, with formal voting a rarity [1].
• Measurable outcomes: record gross collection of ₹22.08 lakh crore in FY 2024-25 (9.4% growth) and a taxpayer base widened from 66.5 lakh in 2017 to 1.51 crore, signalling deeper formalisation [2].

Fault lines

• Compensation: the guaranteed 14% revenue-growth protection lapsed after the five-year window, the Centre clearing the final ₹16,982 crore for June 2022 [4]. States lost their revenue cushion, and pandemic-era borrowing arrangements left lasting distrust.
• Rate-setting: in Mohit Minerals (2022) the Supreme Court held Council recommendations to be persuasive, not binding, on Parliament and State legislatures [3] — clarifying federal balance but opening the door to divergent State action. Multiple slabs and the inverted duty structure remain unresolved.
• Revenue sharing: growth is increasingly import-led, and IGST on imports accrues to the Centre before apportionment, delaying State cash flows. States surrendered most of their indirect-tax autonomy while retaining large expenditure obligations.

The Council remains India's boldest federal experiment, and its problems are of maturity rather than design. Institutionalising the dispute-resolution mechanism envisaged under Article 279A(11), operationalising GSTAT fully, rationalising slabs and making IGST settlement transparent would restore trust — turning a consultative forum into genuinely cooperative fiscal federalism.