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Race for GST committee chairman hots up

The Centre will deal with this key man to rope in all states to roll out the proposed National GST (GST) by April 1, 2016

BS Reporter 

A number of names are doing the rounds for chairman of the The Centre will deal with this key man to rope in all states to roll out the proposed National Goods and Services Tax (GST) by April 1, 2016. Gujarat Finance Minister appears to be the front-runner, but sources said the Centre might also appoint the finance minister of the the opposition-ruled state, such as Amit Mitra of West Bengal or K M Mani of Kerala, to evolve a consensus among all states over the issue. However, Mani's alleged involvement in bar bribery case might come in the way of selection.

Andhra Pradesh’s and Jammu and Kashmir’s Haseeb Drabu are also in the reckoning. Earlier, a few states such as West Bengal had expressed reservations over the way the constitution amendment Bill on was tabled in the Lok Sabha. On Friday, the state panel had deferred selecting the chairman, as many state finance ministers did not come due to their state Budgets. State finance ministers present at the meeting had told the media they had "unanimously" chosen to let Finance Minister Arun Jaitley decide on a new chairman. A new date for the next meeting is yet to be fixed. When asked who is most likely to become the chairman, a key source said, “wait and watch”. Jaitley on Friday had said he would defer the move, opting to first consult state finance ministers who weren't present at Friday's meeting. "By consensus, we will have the new chairman of the empowered committee in the next few days," he had said.

States that had either presented their Budgets or are about to in the coming days include Maharashtra, Uttarakhand, Haryana, and Karnataka.

Revenue Secretary Shaktikanta Das had said before taking a decision on a new chairman, either another meeting would be held soon or Jaitley could consult the members absent on Friday separately.

Jaitley had said parliamentary discussions on the Constitution amendment Bill for would be held in the second half of the Budget session, starting April 21. The Bill has already been tabled in the previous session.

The post of the chairman fell vacant as Abdul Rahim Rather, former finance minister of Jammu & Kashmir (J&K), lost the Assembly elections from the Charar-e-Sharief constituency, ending his 37-year stint in the J&K Assembly.

The committee was set up by the Atal Bihari Vajpayee-led National Democratic Alliance (NDA) government in 2000. It was mandated with facilitating the states to switch from sales tax to the value-added tax (VAT) regime. On April 1, 2005, state-level VAT replaced sales tax in a number of states; some, such as Uttar Pradesh and Tamil Nadu, joined later. Subsequently, the committee was mandated with facilitating states to switch to GST, in consultation with the Centre.

Former West Bengal finance minister and Communist Party of India (Marxist) leader Asim Dasgupta was the committee's chairman since its inception till 2011.

He was followed by Bharatiya Janata Party's Sushil Kumar Modi and, subsequently, Rather.

Under Rather's chairmanship, Jaitley was able to broker an agreement with the states on GST, before tabling a constitutional amendment Bill in this regard in Parliament. However, some states such as West Bengal did point out that they were not consulted on changes in the Bill.

Except for Rather, the two earlier chairmen were from the opposition-ruled states. Modi was selected when Pranab Mukherjee was the Union finance minister during the United Progressive Alliance (UPA) regime.

Rather broke this tradition as he is from the National Conference, an ally of the UPA. He was appointed when P Chidambaram was the finance minister in the UPA II.

The role of the chairman of the GST panel assumes importance since the constitutional amendment Bill on the new indirect tax, pending in the Lok Sabha, requires assent of at least half of the total states -15 - to make it a law. Also, GST can be introduced across India, when every state Assembly, along with Parliament, passes their respective GST Bills.

There were major differences between the states and the Centre over inclusion of petroleum in GST. Ultimately, it was included in GST, but the Centre was allowed to impose excise duty and the states VAT till the proposed GST council decides on the issue.

Meanwhile, the Centre has made situation amenable for states to embrace GST by getting Cabinet clearance for the release of Rs 33,000 crore in tranches to states and Union Territories to compensate them for revenue loss on account of cut in Central Sales Tax (CST) for three financial years up to 2012-13. In the first phase, Rs 10,800 crore is payable for 2010-11, sources said.

A total amount of Rs 33,000 crore is proposed to be released in 2014-15 and the subsequent two financial years. CST, a tax on inter-state movement of goods, was cut from four per cent to two per cent in phases, after states embraced VAT from April 1. However, there was a dispute between states and the Centre over the amount of compensation, where the former wanted the latter to build trust with them on this account to enable them to support GST.

First Published: Tue, March 24 2015. 00:45 IST