GST Scenario Updates for July and August[1]

CA. RAJAT MOHAN

Goods and Service ix getting delayed yet again. In this light it would be of utmost importance that we update ourselves of all the developments in this arena of GST. I have taken up important information’s from monsoon session of parliament, empowered committee meetings, news, views etc. on Goods and Service Tax.

 21 July, 2010 Speech of Finance Minister at the Meeting with the Empowered Committee of State Finance Ministers.

 22 July, 2010 Times of India, India: States on board, GST to roll out from Apr 2011 (Relevant extracts)

It is now almost certain that the goods and services tax (GST), which is to replace the existing VAT, service tax, excise duties and central sales tax among others, will be in place from April 1 next year. 

The Centre and states on Wednesday arrived at a broad consensus on rolling out independent India’s biggest tax reforms that will simplify the manner in which corporates, small enterprises and traders will be levied taxes on goods and services. 
Almost all states have agreed to the proposed GST implementation from April 1, 2011. The new indirect tax reform is to streamline the movement of goods and services across India with a single tax structure.

Pranab Mukherjee has set a deadline of August 20 for states to give their final consent on the new duty structure and all other pending issues, including the proposed constitutional amendment. This is to enable him to move the GST Bill in the monsoon session of Parliament. 
The empowered group of state FMs has decided to meet on August 4 in the Capital to thrash out all pending issues. Meanwhile, the empowered group and the Centre in Wednesday’s meeting set a timeline to work on rolling out of the GST architecture. They have decided to create a common GST portal for both Centre and states where all taxpayers above a specified threshold, likely to be Rs 10 lakh, will directly pay tax. The existing state and central structure will be used for audit purposes and enforcement issues. 
[Note: Speech of Finance Minister in Empowered Committee meeting was well appreciated, most of Indian newspapers that I read were hinting that Government is now closer to implantation of GST w.e.f. 1st April 2011. This meeting was taken as one the most positive movements in the favor of GST. Impact of this meeting was so positive that around this time even Northern India Regional Council of ICAI decided to form GST Research Study Group.]

 27 July, 2010 Times of India, India GST, tax code bills face stiff opposition in house

With the main Opposition BJP gearing up for a confrontation with the government on a range of issues in Parliament, UPA managers are apprehensive of a fallout in its attempt to forge consensus on its ambitious tax reforms bills — Goods and Services Tax (GST) and Direct Tax Code (DTC). The two bills are likely to be introduced in the current monsoon session. 
The two bills will require the support of two-thirds of both Houses to go through Parliament. Besides, they need ratification by 15 assemblies. In Lok Sabha, the requirement works out to 362 of the 543 members. In the Rajya Sabha, the two-third threshold translates into the support of 162 members.

The first sign that the BJP may not play along came last week when BJP’s top leaders, protesting against CBI’s move against Gujarat home minister Amit Shah, skipped a lunch hosted by Prime Minister Manmohan Singh. Finance minister Pranab Mukherjee had recently admitted that it was not possible to pass the two bills without the support of the BJP. To build a consensus, in the last two months, he had held zonal meetings with banking chiefs, clubbing them with one-on-one with all the chief ministers to create awareness on the importance of the proposed reforms and seek their support. 
At the Centre, he already had a round of luncheon meeting with BJP top brass comprising former deputy PM L K Advani and leaders of Opposition in the two Houses, Sushma Swaraj and Arun Jaitley. 
However, the imbroglio over Amit Shah may be a calculated temporary move by the Congress, as some party insiders say, to break the Opposition ranks on price rise. The government has enough time at hand.

[Note: After few days of 21st July meeting there were reports in newspapers regarding dissatisfaction among States regarding GST. Even as the Chief Ministers of the Congress-ruled States sought adequate compensation, those of the BJP-ruled States expressed apprehension that the GST would limit their autonomy in levying taxes. Karnataka Chief Minister B.S. Yeddyurappa, Chhattisgarh Chief Minister Raman Singh, Gujarat Chief Minister Narendra Modi, Haryana Chief Minister Bhupinder Singh Hooda, Punjab Chief Minister Parkash Singh Badal, Madhya Pradesh Finance Minister Raghavji  has even raised there concerns on GST in public over one issue or the other.]

 4 August, 2010 The Tribune New Delhi  GST: States reject draft Bill, Rollout may be delayed

States today rejected a draft Bill on Goods and Services Tax over a clause giving the Centre power to veto their decisions, even as Finance Minister Pranab Mukherjee sought their cooperation for passage of the tax reform.

States feared that giving veto power to the Union Finance Minister on state GST would dilute their fiscal autonomy.

"This proposed draft Constitutional amendment Bill related to GST in its present form is not acceptable to the states... States in general have reservations about the Union Finance Minister having any veto power on state GST," Empowered Committee of state finance ministers Asim Dasgupta told reporters here.

The rejection came within hours of Union Finance Minister Pranab Mukherjee appealing in Parliament to Opposition parties and states for their cooperation to implement GST from next fiscal, saying this indirect-taxes reform measure would help arrest fluctuation in the general price line.

GST will replace the excise duty and service tax at the Central level and value-added tax at the state level, besides the cess, surcharges and local taxes.

Some BJP-ruled states expressed doubts whether at all GST would be introduced from next fiscal.

Dasgupta said states are against infringement on their financial autonomy and have certain reservations on the draft bill’s provisions for the GST Council and the GST Disputes Authority.

He said Union Finance Minister, of course, would have an exclusive authority with respect to central GST.

The states also feel that GST Disputes Authority should not find a place in the Constitutional amendment Bill and may be incorporated in GST legislations.

"So, how to handle a situation where state GST and central GST would be there will have to be appropriately and acceptably handled," he said.

In Parliament, Mukherjee said: "The Bill (for constitutional amendments) has to be introduced in this session, has to be examined by the Standing Committee, it has to be ratified by 15 states. Otherwise, there will be another delay ... I seek cooperation of the entire House." Mukherjee said GST would help curb volatility of prices in items and sought the Opposition’s help to even include petrol in the proposed GST regime so that its prices do not fluctuate much in the domestic market.

 5 August, 2010 Speech of <

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