States lost all their taxing power once GST was introduced.

States did not lose power — Article 246A specifically gives them concurrent power to make GST laws for supplies within their own territory, alongside Parliament.

The GST Council's recommendations are legally binding on Parliament and states.

The Supreme Court in Mohit Minerals (2022) clarified that GST Council recommendations are only persuasive; Parliament and State legislatures retain independent law-making power under Article 246A.

The Constitution of India

Article 246A

Special provision with respect to goods and services tax

(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.§

(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.§

Explanation.—The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recommended by the Goods and Services Tax Council.]§

Why this exists

Before 2017, India had a fragmented indirect tax system — states and the Centre each taxed goods and services separately (VAT, excise, service tax, etc.), causing tax-on-tax effects and compliance chaos. The 101st Constitutional Amendment Act, 2016 inserted Article 246A to create a unified Goods and Services Tax (GST) regime, giving both the Union and States concurrent taxing power over the same subject for the first time, while reserving inter-state GST exclusively for Parliament to keep it uniform and simple across state borders.

How courts read it

In Union of India v. Mohit Minerals Pvt. Ltd. (2022), the Supreme Court examined the cooperative federalism structure created by Article 246A alongside Article 279A. It held that recommendations of the GST Council are persuasive, not binding, on Parliament and State legislatures, since both retain simultaneous, independent legislative power under Article 246A rather than being subordinate to the Council.

Common misconceptions

Myth: States lost all their taxing power once GST was introduced.
Fact: States did not lose power — Article 246A specifically gives them concurrent power to make GST laws for supplies within their own territory, alongside Parliament.
Myth: The GST Council's recommendations are legally binding on Parliament and states.
Fact: The Supreme Court in Mohit Minerals (2022) clarified that GST Council recommendations are only persuasive; Parliament and State legislatures retain independent law-making power under Article 246A.