CHANGING MOMENTUM OF GST: STILL MORE TO DO

When a ray of hope is coming in the successful implementation of Goods and Services Tax (GST),suddenly a momentum changes in favour of those who are strictly opposing the rolling out of the GST.

In the last meeting of the Empowered Group of State Finance Ministers on GST to thrash out all pending issues , three major issues arises in front of the Government , with several states giving a thumbs-down to the draft Constitutional Amendment Bill prepared by the Centre.

These major issues are:

1. Veto Power: In this meeting , states ruled by political parties other than the Congress came out openly  against the proposal to give veto power to the Union Finance Minister. However, Congress ruled States also had reservations to give veto power to the  UnionFinance Minister but they avoid from publicly opposing the proposal. The proposed Constitution Amendment Bill has vested the Union Finance Minister with a veto power as a member of the GST Council of Finance Ministers. The main idea behind this veto power is to create a council as a disciplinary body whose decision will be binding on all , so that none deviates from the GST regime.

2. Dispute Settlement Authority: The Centre is preparing to create GST Disputes Authority under the provisions of the Constitution Amendment Bill. However ,States are of the opinion that the GST Dispute Authority should not be the part of the Constitution Amendment Bill and may be incorporated in GST Legislation.

3. Petroleum Products: Another major issue is relating to the Petroleum products. Finance Minister Mr. Pranab Mukherjee suggestion to include petroleum products within the GST ambit has underlined the need for a fresh discussion paper on the GST. However, most of the states are looking positively towards the inclusion of petroleum products under the GST, but its implementation at this stage is not advisable.

In addition to these issues, some of the statements which are given by the Finance Ministers against the current structure of GST are:

'GST  implementation from April next year is not possible'

[Mr.Raghavji ,MP Finance Minister]

'States are left with no powers in the proposed draft'

[Mr.Saurabh Patel, Gujrat  Finance Minister]

'Veto power is not acceptable'

[Mr.Manpreet Singh Badal, Punjab Finance Minister]

'Veto power is not acceptable, there should be a Vice-Chairman from the States'

[Mr. Thomas, Kerala Finance Minister]

However, the Finance Ministry is redrafting the Constitution Amendment Bill to roll out a GST from the next financial year. Here the main point of discussion would be the- VETO POWER. The concerns of the states over the Finance Minister’s Veto Power will then be addressed.

Inspite of all these issues .one thing on which the Centre can feel proud of that they had managed a broad consensus among most states on GST.

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Author: Nagesh Bajaj

LawCrux Advisors (P) Ltd.

Law House