Union of India v Mohit Minerals Pvt Ltd
Rule established
Article 246A confers simultaneous legislative power on the Union and the States over goods and services tax. The Goods and Services Tax Council under Article 279A is a deliberative body whose recommendations have persuasive value only and are not binding on the Union or the States.
Facts
- Goods were imported into India on cost, insurance and freight terms, so that the foreign exporter arranged and paid for the ocean transport.
- The importer paid integrated goods and services tax on the value of the imported goods, that value already including the freight component.
- Notifications additionally imposed integrated goods and services tax on the ocean freight as a separate supply of transportation services, payable by the Indian importer on a reverse charge basis, although the importer was not a party to the contract of carriage.
- The importer challenged the notifications as amounting to double taxation and as being beyond the scope of the enabling provisions.
- In the course of argument the Union relied on the fact that the notifications had been issued on the recommendations of the Goods and Services Tax Council, and contended that those recommendations were binding.
- The question of the constitutional status of the Council's recommendations therefore fell to be decided.
Issue
- Whether the recommendations of the Goods and Services Tax Council are binding on the Union and the States; and whether the levy on ocean freight in the hands of the importer was valid.
Held
- The recommendations of the Council are not binding. They possess persuasive value only. The Court reasoned that Art.246A confers legislative power on the Union and on the States simultaneously, not by way of delegation from one to the other, so neither derives its authority from the Council. Art.279A creates a forum for the two levels to deliberate and arrive at a workable common position, and its function is recommendatory. To treat its recommendations as binding would transfer legislative power from the legislatures to an executive body and would disturb the fiscal balance the amendment created. The Court described the relationship as one of collaborative dialogue in which neither the Union nor the States can proceed as though the other did not exist, and characterised the arrangement as cooperative federalism. On the levy itself, the Court held that the importer could not be made liable for the freight as a separate supply where the transaction was on cost, insurance and freight terms and the freight had already been included in the value on which tax had been paid, so the impugned levy could not be sustained.
Ratio Decidendi
Where a constitutional amendment confers power on two levels of government simultaneously over the same field, each retains its legislative autonomy and neither can be subordinated to a joint executive body. The specification of a weighted voting formula in Art.279A shows that the Council was designed to produce consensus, and a consensus building institution is the antithesis of a body with binding authority. Reading the recommendations as binding would also render the legislative process a formality, since the legislatures would have nothing to decide.
How to use it in an exam
- The most important recent decision on fiscal federalism. State the two holdings separately: Art.246A confers simultaneous power, and the Council's recommendations are persuasive only.
- Note the voting structure in Art.279A for context: the Union's vote counts one third and the States' votes together two thirds, and a decision requires not less than three fourths of the weighted votes of those present and voting, so neither side can act alone.
- Use it in any answer on cooperative federalism, since the Court expressly adopted that description of the relationship.
- Read with Union of India v HS Dhillon 1972 and In Re Sea Customs Act 1963 on legislative competence in taxation, and with S R Bommai v Union of India 1994 on federalism as a basic feature.
- Note the practical tension the decision leaves: a common tax requires uniformity, but the States are not legally bound to adopt what the Council recommends, so the system depends on political cooperation rather than legal compulsion.
Source
Source: (2022) 10 SCC 700; judgment dated 19 May 2022; the most important recent decision on fiscal federalism and the status of the Goods and Services Tax Council's recommendations; citation and bench checked against Indian Kanoon and reported sources, audit of 12 August 2026
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.