Context: In a recent judgement, SC highlighted the importance of “cooperative federalism” stating states have equal powers to make laws on Goods and Services Tax (GST).

What is the case?

• The apex court’s decision came while confirming a Gujarat High Court ruling that the Centre cannot levy Integrated Goods and Services Tax (IGST) on ocean freight from Indian importers.

Key takeaways of the Judgment

• The recommendations of the GST Council are the product of a collaborative dialogue involving the Union and the States.
• They are recommendatory in nature. They only have a persuasive value.
• To regard them as binding would disrupt fiscal federalism when both the Union and the States are conferred equal power to legislate on GST.

Basis of the Judgment

• The court emphasised that Article 246A of the Constitution gives the States power to make laws with respect to GST.
• It treats the Union and the States as “equal units”.
• It confers a simultaneous power (on Union and States) for enacting laws on GST.
• Article 279A, in constituting the GST Council, envisions that neither the Centre nor the States are actually dependent on the other.

Constitutional Provisions for Cooperative Federalism
Article 246A of the Constitution treat the Union and the States as “equal units”.

• It gives the States power to make laws with respect to GST.

Article 279A, in constituting the GST Council, envisions that neither the Centre nor the states are actually dependent on the other.

Cooperative federalism

• It is defined as a flexible relationship between the federal and state governments in which both work together on a variety of common issues and programs.
• Cooperative Federalism is also known as marble-cake federalism.
• It is a horizontal relationship shared between the union and the states where neither is above the other.
• It has been engrained through various aspects of our Indian Constitution like;
• Schedule VII and Article 249 or the All-India Services provide uniting forces through Article 312.
• Establishment of five Zonal Councils under the State Reorganization Act of 1956.
• Formation of an inter-state council under Article 263 to draw a parallel between the common interests of both: the union and the states.
• The concept of cooperation is also highlighted under Article 261 wherein full faith and credit is to be given to the public act, records, and judicial proceedings of both, Union and the States.

Challenges to cooperative federalism in India

Regionalism

• The demands of formation of different states and the alleged neglect faced by people belonging to the southern part of the country pose a great challenge for smooth cooperative federalism in India.
• Regional movements like the Dravidian Movement of the 1940s or the non-Brahmin movement led to the formation of a separate and independent Tamil Nadu.

Language conflict

• Different regional languages of different states create communication gaps and hinder the understanding capability.
• The indestructible union and the destructible states:
• Telangana was formed after the division of Andhra Pradesh without the consent of the State legislature.
• It was done in face of public opposition and without any negotiated settlement.
• Such steps have eroded the state’s trust on the Union.

Other challenges include

• The role of the Governor as the representative of the central government, which has always been a controversial topic as explained in the aforementioned cases.
• The non-participation of the states in the economic and social planning under concurrent list.
• The exercise of the Union’s authority over the central and regional planning through NITI Aayog and other legislative conflicts.
• The centrally sponsored schemes have replaced the dialogue of the states.
• The failure of CBI as investigation falls under Union list but police is a state subject and the frequent accusation of CBI being Centre’s tool to harass state governments.