Amendment bill for GST secures Cabinet nod

The Union Cabinet on Tuesday approved a Constitution Amendment Bill, paving the way for its introduction in Parliament, for rolling out the Goods and Services Tax (GST). The government will try to table the Bill before the current session of Parliament ends on March 25.

“We will try to introduce it in Parliament,” said a Cabinet minister, adding the law ministry has been asked to incorporate a few changes in it.

However, the Centre will have to convince the Opposition to introduce the major indirect tax reform in the country, since states ruled by the BJP, along with a few others, are still opposed to the Bill and the ruling dispensation does not have the required strength either in the Lok Sabha or the Rajya Sabha.

The BJP has cautioned the government that it would not be able to pass the Bill unless states, including those ruled by the Opposition, were taken on board. Leader of the Opposition in the Lok Sabha, Sushma Swaraj, said her party would discuss the amended draft of the proposed legislation if the government sends it.

Senior BJP leader, S S Ahluwalia, said, “If the government thinks it can do so (pass the bill) without Opposition help, then let them do it. Can they pass it now?”

The Constitution (115th Amendment) Bill, 2011, proposes to give powers to both the Centre and the states to make laws with respect to goods and services tax. A Constitution Amendment Bill is necessary since currently, the Centre cannot impose excise duty beyond the manufacturing stage and the states cannot levy a tax on services.
 

KEY FEATURES

* Parliament and the legislature of every state have power to make laws with respect to goods and services tax imposed by the Union or state

* Goods and Services Tax levied and collected by the government of India shall also be distributed between the Union and the states

* The President shall by order constitute a Goods and Services Tax Council, to be headed by Union finance minister

* GST will be levied on supply of goods or services or both except taxes on the supply of petroleum, diesel, natural gas, ATF and alcohol

The Bill came after three amendments were made to the original draft released by the government in July 2010. All three drafts prepared by the Centre were rejected by the states, as they feared they would lose their autonomy in the GST regime. The Centre has not discussed the fourth draft with the Empowered Committee of State Finance Ministers as it would be first considered by the Standing Committee of Parliament, which comprises members of many political parties.

The Bill is a hybrid version of the second and the third draft. It proposes setting up a GST Council by Presidential order, as stated in the second draft. The council will consist of Union finance minister as chairman and representatives of state governments as members. The third draft had proposed constitution of GST Council by an Act of Parliament, which was opposed by many states.

The composition of the GST Dispute Resolution Authority, proposed to be a part of the Constitution Amendment, will be decided by Parliament. Petroleum, natural gas, diesel and Aviation Turbine Fuel have been kept out of the GST ambit in the final draft.