Explain the significance of the 101st Constitutional Amendment Act. To what extent does it reflect the accommodative spirit of federalism?

Introduction

The 101st Constitutional Amendment Act, 2016 created the Goods and Services Tax — the largest redesign of India's indirect-tax system since Independence — by inserting Articles 246A, 269A and 279A into the Constitution.

Significance

• One nation, one tax: it subsumed some 17 central and state levies (central excise, service tax, VAT, entry tax, octroi) into a destination-based GST, stitching together a common national market.
• Article 246A confers simultaneous taxing power on the Union and states; Article 269A governs IGST on inter-state supplies; Article 279A creates the GST Council as a permanent federal body.
• Outcomes: removal of cascading, e-way bills replacing checkpost delays, formalisation of businesses, and buoyant revenues — gross collections crossed ₹22 lakh crore in 2024-25.

Accommodative spirit of federalism

• Pooled sovereignty: both the Union (excise, service tax) and the states (VAT) surrendered exclusive powers — a mutual, not one-sided, concession.
• The Council's weighted voting — Centre one-third, states two-thirds, decisions by three-fourths majority — makes neither side dominant; almost every decision has been consensual, with voting resorted to only once (lottery taxation, 2019).
• A five-year compensation guarantee of 14% revenue growth persuaded states to join; special rates and thresholds accommodated smaller and special-category states.
• Mohit Minerals v. Union of India (2022) held Council recommendations persuasive rather than binding, describing GST as the product of “cooperative dialogue”.

Limits

• The Centre's one-third vote share is an effective veto; states lost autonomous rate-setting power.
• Compensation ended in June 2022 — the cess now only services pandemic-era borrowings — and earlier payment delays strained trust.
• The dispute-resolution mechanism envisaged under Article 279A(11) remains unconstituted.

Conclusion

The Amendment embodies federal accommodation by design — bargained, consensual and mutually limiting. Sustaining that spirit now requires fiscal assurance to states and an institutionalised dispute-settlement forum.