UPSC Mains 2023 GS2 Q15: model answer
Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism ?
What the question wants
Significance of the GST amendment and its federal character, with limits.
How to structure it
Intro: 101st Amendment Act, 2016 introduced GST from 1 July 2017. Body: (1) Significance: one nation one tax, removed cascading, Art. 246A concurrent taxing power, Art. 269A IGST, GST Council (Art. 279A), compensation for five years; (2) Accommodative federalism: shared power, Council with Centre one-third and States two-thirds vote, consensus decisions, compensation; (3) Limits: loss of fiscal autonomy, Centre's veto, compensation ended 2022, delays, Mohit Minerals (2022) Council recommendations not binding. Conclusion: pooled sovereignty; trust key.
- 1(1) Significance: one nation one tax, removed cascading, Art. 246A concurrent taxing power, Art. 269A IGST, GST Council (Art. 279A), compensation for five years
- 2(2) Accommodative federalism: shared power, Council with Centre one-third and States two-thirds vote, consensus decisions, compensation
- 3(3) Limits: loss of fiscal autonomy, Centre's veto, compensation ended 2022, delays, Mohit Minerals (2022) Council recommendations not binding
Model answer
The Constitution (101st Amendment) Act, 2016 introduced the Goods and Services Tax from 1 July 2017, replacing many Central and State indirect taxes.
- Art. 246A: concurrent taxing power
- Art. 269A: IGST on inter-State supply
- Art. 279A: GST Council
- Centre one-third, States two-thirds votes
- Five-year compensation
Significance
- Art. 246A: both Parliament and State legislatures can tax the supply of goods and services, a new concurrent taxing power.
- Art. 269A: Integrated GST on inter-State supply.
- Art. 279A: GST Council to recommend rates and rules.
- Removed cascading taxes and check-posts, creating a common national market.
- Compensation to States for five years for revenue loss.
- Better compliance through an online system and wider tax base.
Accommodative federalism
- States gave up some taxing power, and so did the Centre: pooled sovereignty.
- In the GST Council the Centre has one-third of the votes and States two-thirds; decisions need three-fourths, so neither side can act alone.
- Nearly all decisions have been taken by consensus.
- Compensation and protection for special category States.
Limits
- The Centre's one-third vote acts as a veto.
- States lost the freedom to set rates, weakening fiscal autonomy.
- Compensation ended in June 2022, while States' revenues had not fully recovered.
- Delays in compensation during COVID caused friction.
- Petroleum and alcohol remain outside GST.
- In Mohit Minerals (2022) the Supreme Court held Council recommendations persuasive, not binding, reflecting cooperative and also contested federalism.
The amendment is a bold experiment in shared sovereignty. Its success rests on trust and fair treatment of States.
Keywords, cases and data to drop in
Art. 246A Art. 279A GST Council pooled sovereignty Mohit Minerals
Where most answers lose marks
- Describing GST economics only.
- No limits to federal spirit.
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Question text as printed in the official UPSC question paper: https://www.upsc.gov.in/sites/default/files/QP-CSM-23-GENERAL-STUDIES-PAPER-II-180923.pdf The model answer is original Battle IAS work; use it to learn structure, not to memorise.