The GST Council exemplifies India's model of cooperative and competitive federalism. Discuss with reference to recent revenue-sharing debates.

Article 279A makes the GST Council a joint Centre–State forum where the Centre holds one-third of votes, States two-thirds, and decisions need a three-fourths weighted majority [1]. This design institutionalises pooled sovereignty — cooperation on tax architecture coexisting with sharp competition over revenue shares.

Cooperative federalism in action

• Shared veto: neither the Union nor the States can carry a decision alone under the 1/3–2/3, 3/4-majority formula, forcing negotiated consensus [1].
• Consensus-driven structural reform: the 56th Council meeting (September 2025) compressed multiple slabs into a two-rate structure of 5% and 18%, with a 40% demerit rate — a reform no single government could have delivered [2].
• Risk-sharing: the compensation framework guaranteed States 14% annual revenue growth for five years, backed by cess and back-to-back central loans during the pandemic shortfall [3].

Competitive federalism within the same forum

• Mohit Minerals (2022): the Supreme Court held Council recommendations to be persuasive, not binding, preserving States' legislative and fiscal autonomy [4].
• Destination-based GST shifts revenue to consuming States, pushing producing States to bargain harder in the Council.
• States compete on compliance, enforcement and formalisation to widen their own SGST base.

Recent revenue-sharing debates

• August 2026 gross collections rose 14.8% to ₹1,99,853 crore, but net collections grew only 8.3% as refunds surged — the shrinking gross–net gap directly compresses what is available for devolution [5].
• Refunds driven by the inverted duty structure signal a design flaw the Council alone can correct through rate rationalisation [5].
• Import-linked GST grew 29% against 9.3% domestic growth, making IGST apportionment rules — not own-source collection — decisive for State finances [5].
• With compensation ended and cess servicing past loans [3], States seek a fresh cushion after rate cuts.

The Council thus cooperates on the framework while competing on shares. Going forward, correcting inverted duty structures, transparent and timely IGST settlement, and a Finance Commission-anchored successor to compensation can keep this grand bargain credible — realising Article 279A's promise of shared fiscal sovereignty.