FM slams Congress's obstructionist attitude in blocking GST

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SME Times News Bureau | 03 Aug, 2015
Acknowledging that there may be merit in the Congress's demand for an 18 percent rate of the proposed goods and services tax (GST), Finance Minister Arun Jaitley on Sunday held the main opposition party responsible for disrupting parliament and said "its obstructionist tendencies inflict an economic injury on the country".

"The Congress members have proposed that a rate of GST be fixed in the constitution as not exceeding 18 percent. There may be some rationale in the rate recommended by the Congress," Jaitley said in a point-wise rebuttal of the Congress's dissent note to the Rajya Sabha Select Committee on GST.

"However, the rates of taxation are usually not fixed in the constitution. The rates have to be recommended by the GST Council depending on various factors such as economic conditions, revenue buoyancies etc and incorporated in the GST laws," he said in a Facebook post.

"The state governments belonging to the Congress have consistently supported the proposal. Is it only out of an obstructionist attitude that the Congress has adopted a negative role," he asked.

House proceedings have been repeatedly disrupted since it re-convened last month, over issues like the Lalit Modi controversy and the Vyapam scam.

"Since parliament is not functioning and there is no way to clarify these points before the same, I am constrained to place the above facts in public domain," the finance minister wrote in the post titled "Dissent or Disruption - The Congress Party's Position on GST".

"Should its (Congress) obstructionist tendencies inflict an economic injury on the country," he asked.

The cabinet on Wednesday gave its nod to some changes recommended by a parliamentary panel, notably an extra 1 percent levy to compensate the states for potential tax losses.

According to sources, some of the suggestions accepted on Wednesday by the cabinet include a definite commitment to compensate states for the losses on account of moving to a unified pan-India indirect tax regime for five years, compared with a vague expression "may compensate" in the original bill.

The GST seeks to create a single Indian market by subsuming most indirect taxes levies of the central and state governments, such as excise duty, service tax and value-added tax that is seen as facilitating tax compliance, and curbing inflation through better supply chains.

But securing legal sanction for GST is proving a lengthy process, given the BJP's lower strength in the upper house.

Being a constitution amendment bill, it needs passage in parliament with two-thirds majority, following which at least 15 state legislatures have to ratify it, before it can be sent to the president for his assent.

The opposition is mainly opposed to the proposal for a 1 percent additional tax on goods travelling from one state to another, as it is felt it would not only push up prices, but also have a cascading effect.

Shortly ahead of the cabinet meeting on Wednesday, Congress leader M. Veerappa Moily, also the chair of the parliamentary panel on finance, expressed his reservations.

"Right from the beginning, we have been telling that there is no need for effecting such amendments through a series of ordinances. There is some deficiency in this government," Moily told reporters on the margins of a seminar organised by industry chamber Assocham.

"There is a big process involved. This (amendment) will be only a constitutional framework for GST. The Centre has to pass a GST Act. Each state will then have to pass a GST Act. It is a long way off."

In case of the provision for levying 1 percent additional tax by states, the committee suggested the levy should only apply to "all forms of supply made for a consideration".

According to the bill, when goods move from one state to another, an additional one percent tax would be levied but the opposition said it would lead to a cascading effect.

The central government has set the target to reform India's indirect tax regime from April next year, and had earlier proposed 100 percent compensation to states for the first three years.