The Dynamics of Centre-State Relationship under GST Regime: A Case Study on One-Nation One-Tax in India

The journey to finally establishing the country-wide regime of the GST in India has been rather a bumpy ride. Amidst the numerous political and legal approvals and disapprovals, the GST tax system was finally enacted on 1st July, 2017 in India under the authority promulgated through the 101st Constitutional Amendment Act 2017 by the Government of India under the leadership of Hon. Prime Minister, Narendra Modi. The basis for the enacting of the so-called “GST Law” was in the political and bureaucratic desire to avoid double taxation as well as tax on some levy or tax. In other words, the GST system aims at fair and consistent tax regime across the nation. It is observed in this paper that the GST system has been unsuccessful for manifold reasons. It is hypothesized in this study that unless the legislative and administrative actions related to the concept of “one-nation one-tax” is implemented in a manner that the tax regime strengthens the federal structure of governance; the States will not be willing to accept the newly enacted GST regime happily in India. It is argued that the Centre-State relationship will remain estranged in case of at least those States where the State Governments are ruled by the different political parties than that at the Centre. The importance of good governance cannot be ignored. The Constitutional principle of federalism has been the highlight of the paper in the Centre-State dynamic relationship. The author wishes to stress upon the growing concerns of the State Governments under the GST regime and also discuss the solutions and the structural changes that could be implemented to make the GST system more effective and efficient.