Keeping up his persuasive pressure to have all State governments on board, even as the Bharatiya Janata Party-ruled States are opposed to the rollout of the Goods and Services Tax (GST) from April 1, 2011, Finance Minister Pranab Mukherjee on Wednesday made it clear that the proposed GST Council would only be a recommendatory body that would help in taking decisions by consensus and that the “primacy of the legislature in the area of taxation [was] supreme and inalienable.”
Addressing the apprehensions of some States at his meeting with the Empowered Committee of State Finance Ministers here on the “binding” nature of the GST Council decisions — from the perspective of loss of autonomy — Mr. Mukherjee pointed out that the proposed draft did not seek to disturb or alter the primacy of the legislature in any manner.
“The decisions of the GST Council would be ‘recommendations' to the Union and the States. Since these decisions would be taken by ‘consensus,' it is for us to respect them and develop a healthy convention of abiding by them, as is the case with several other constitutionally mandated bodies,” he said.
The States, especially the ones ruled by the BJP, had expressed concern over the loss of fiscal autonomy on account of the grant of veto power to the Union Finance Minister as chairman of the GST Council, as contained in the draft Constitution Amendment Bill for facilitating the implementation of the new indirect taxation regime.
Seeking to mollify the States on this issue, Mr. Mukherjee said that at the very least, the collective wisdom of the GST Council would be a valuable recourse in benchmarking rates, exemptions, thresholds and other key parameters. “Even if its decisions are not binding, they would be useful as guiding principles, which we would choose to ignore or violate only in very grave or exceptional circumstances,” he said.
Pitching for the rollout of the GST regime from April 1 next year, he assured the States that based on the feedback received from them, all their concerns would be addressed by the joint working group in the third draft of the Constitution Amendment Bill.
Earlier in the day, the empowered panel met under the chairmanship of West Bengal Finance Minister Asim Dasgupta wherein the BJP-ruled States pointed out that more time was required to respond to the revised draft. “The States have got hardly two working days to examine the revised draft and take a decision thereon...,” Madhya Pradesh Finance Minister Raghavji said.
“I have been wondering as to the reason for the rush to implement the GST as if the country is passing through a severe financial crisis and GST is the panacea for all the ills,” he said. He felt that the haste with which the draft bill was being examined “[was] a precursor of the things to come, once the process for amending the Constitution is over”.
The Centre plans to introduce the amendment Bill in the current session of Parliament to facilitate the rollout of the GST from the proposed date.
