Union of India v. Mohit Minerals (2022)

Union of India v. Mohit Minerals Pvt. Ltd. is a constitutional judgment delivered by a three-judge bench of the Supreme Court of India on 19 May 2022, reported as 2022 SCC OnLine SC 657. The dispute arose from the levy of Integrated Goods and Services Tax (IGST) on ocean freight for goods imported on a Cost-Insurance-Freight (CIF) basis. The Union government, relying on Notification No. 8/2017 and Notification No. 10/2017 issued under the Integrated Goods and Services Tax Act, 2017, sought to tax the freight component on a reverse-charge basis in the hands of the Indian importer. The litigation reached the apex court after the Gujarat High Court, in January 2020, struck down the notifications as ultra vires. The case is significant less for its narrow tax question than for the bench's expansive reading of Article 246A, Article 269A, and Article 279A of the Constitution, inserted by the Constitution (One Hundred and First Amendment) Act, 2016, which created the constitutional architecture of GST.

The procedural and doctrinal core of the case turned on two questions. First, whether IGST could be levied on ocean freight in a CIF contract where the importer was not party to the freight agreement between the foreign exporter and the foreign shipping line. The Court, per Justice D.Y. Chandrachud, held the levy unconstitutional because the importer was already paying IGST on the composite supply of imported goods (a value that statutorily includes freight under the Customs valuation rules), so a separate levy on the freight constituted impermissible double taxation. The supply of transportation services by a foreign shipper to a foreign exporter was held to lack the territorial nexus required to tax the Indian importer as a recipient. Second, and more consequentially, the Court examined the constitutional status of the GST Council's recommendations.

On the second question the Court delivered its landmark holding: recommendations of the GST Council under Article 279A are persuasive and not binding on either Parliament or the state legislatures. The bench reasoned that Article 246A confers simultaneous (concurrent) taxing power on both the Union and the states, and that Article 279A uses the word "recommendations" deliberately. Because both levels of government exercise independent legislative competence over GST, the Council functions as a deliberative and recommendatory forum embodying cooperative federalism, not a supra-legislative body whose dictates override the will of an elected legislature. The Court emphasised the voting structure under Article 279A(9), where the Union holds one-third weightage and the states collectively hold two-thirds, and noted that the Council was designed to harmonise, not to subordinate.

Contemporary reactions split along predictable lines. Several state governments, including Kerala and Tamil Nadu, welcomed the ruling as a vindication of state fiscal autonomy, with Kerala's Finance Minister publicly arguing that states could now contemplate independent levies in areas of disagreement. The Union Ministry of Finance and the GST Council Secretariat in New Delhi sought to downplay the disruptive potential, with the then Revenue Secretary clarifying in May 2022 that the Council had always operated by consensus and that no recommendation had to date been forced through over a dissenting bloc. The Central Board of Indirect Taxes and Customs subsequently issued circulars addressing refund claims arising from the ocean-freight portion of the judgment.

The ruling must be distinguished from adjacent doctrines. It does not equate to the position in competitive federalism, where units vie for investment; rather it reaffirms cooperative federalism while clarifying that cooperation does not imply legal compulsion. It is also distinct from the binding force of decisions of bodies such as the Finance Commission's accepted recommendations or the erstwhile Empowered Committee of State Finance Ministers, which had no constitutional footing. Crucially, the judgment does not dismantle GST: the practical machinery of uniform rates depends on legislatures voluntarily enacting the Council's recommendations, and the Court itself acknowledged that disharmony would undermine the regime. The holding therefore creates a legal possibility of divergence without prescribing it.

Debate persists over whether the GST Council observation was strictly part of the ratio decidendi or constituted obiter dicta, since the ocean-freight levy could have been struck down on double-taxation grounds alone. Critics, including some tax commentators and Union officials, argued the federalism discussion was unnecessary to the outcome and risked destabilising a hard-won consensus. Subsequent benches and the Council's own conduct have treated the observation as authoritative, and GST Council meetings since 2022—such as the 47th meeting in Chandigarh in June 2022—proceeded without any state exercising the theoretical power to legislate against a recommendation, indicating that political economy continues to favour consensus despite the absence of legal compulsion.

For the working practitioner—the UPSC aspirant preparing General Studies Paper II, the policy researcher mapping Centre-state fiscal relations, or the desk officer drafting tax notifications—Mohit Minerals is a foundational citation on Indian fiscal federalism. It establishes that the GST Council is an institutional embodiment of dialogue rather than diktat, that Article 246A creates genuinely concurrent fiscal power, and that the unity of the GST regime rests on political consensus rather than constitutional coercion. The judgment is routinely paired with the S.R. Bommai federalism jurisprudence in answer scripts and is essential reading for understanding how India reconciles a single national market with a federal constitutional structure.