Stalemate on GST draft continues

Stance of BJP-ruled states unchanged.

The stalemate between the Centre and the states over the introduction of the Goods and Services Tax (GST) continued on Monday, with some states opposing the changes suggested by the central government in the Constitution.

The one-month time given by the Centre to states to study the Constitutional Amendment draft did not yield any encouraging results, as the stance of most states remained unchanged.

Monday’s meeting saw a very poor attendance from states, with just about 10 ministers turning up for giving their comments on the GST draft. About 20 states had attended the meeting last time.

In the last meeting of the empowered committee on August 18, Madhya Pradesh, Gujarat, Tamil Nadu, Chhatisgarh, Himachal Pradesh, Karnataka, Uttarakhand, Uttar Pradesh and Bihar had opposed the draft, while Punjab, Kerala, Delhi, Haryana, Maharashtra, Orissa, West Bengal and Andhra Pradesh had broadly accepted it. Their stands remained more or less the same, said a finance ministry official.

While some states suggested further modifications in the draft, Madhya Pradesh and Gujarat had strong objections to the proposals on fears these would affect their fiscal autonomy. Madhya Pradesh offered an alternative model for GST in which amendment to Constitution was not required.

“A good number of states have accepted the draft, some have agreed with certain modifications and a few have disagreed,” said Empowered Committee of State Finance Ministers Chairman Asim Dasgupta. Dasgupta said many states did not agree to Gujarat’s proposal but they had been given time to study it.

By allowing the states more time to go through the Constitutional amendment draft, the finance ministry had missed an opportunity to table the draft in the monsoon session of Parliament, which ended last month. After releasing the first amendment draft in July, the Centre had revised it in August by dropping most of its contentious issues, like veto power to the Union finance minister.

“Mostly the BJP-ruled states are opposing. I think there is some political agenda, which has to be dealt with by the BJP high command,” said Haryana Finance Minister Ajay Singh Yadav. Punjab Finance Minister Manpreet Singh Badal agreed there was a political agenda in opposing the draft.

The government has set a deadline of April 2011 for the rollout of GST. It has already missed the original deadline of April 2010. Many states and ministry officials agreed the deadline was likely to be missed again.

Dasgupta, however, said a decision about the deadline would be taken only after meeting Finance Minister Pranab Mukherjee, which would take place “soon”. Empowered committee representatives will now meet Mukherjee to inform him about the suggestions and concerns of each state on the draft.