Empowered Committee of State Finance Ministers Discuss GST Bill
New Delhi, Nov 08- Maintaining that the proposed Goods and Services Tax (GST) regime is the most progressive tax reform, the J&K Minister for Finance and Ladakh Affairs, Mr. Abdul Rahim Rather today said that the state government is a strong votary to the implementation of this tax reform provided the special status guaranteed to J&K by the Constitution of India not tempered with.
Speaking at a meeting of the Empowered Committee (EC) held at Vigyan Bhawan, New Delhi under the chairmanship of Union Finance Minister, Mr. P. Chidambaram today, Mr. Rather said that before implementation of the proposed GST in the country, appropriate provisions should be incorporated in the proposed Amendment Bill to provide protection under Article 246-A, 279-A and 286-A to the existing special constitutional status of Jammu and Kashmir.
Dwelling on the constitutional and legal implications of the proposed GST regime, Mr. Rather said that on a bare perusal of the proposed amendment Bill, at least two most significant features emerge, which are of most serious concern so far as the State of Jammu and Kashmir is concerned.
Firstly, to accommodate the proposed dual integrated model of GST, the amendment Bill envisages both Parliament and State Legislating to have concurrent powers to enact laws to Tax Goods and services. This is being done without taking cognizance of the special constitutional status of Jammu and Kashmir and the necessity to incorporate appropriate amendments in Article-246 of the Constitution of India.
Secondly, the Minister said, the proposed amendment Bill envisages insertion of Article 279-A and Article 279-B for creation of two constitutional bodies viz. the Goods and Services Tax Council and the Goods and Services Tax Dispute Settlement Authority. The former would be a forum to take decisions with regard to the frame-work of GST so as to ensure uniformity and avoid deviations, whereas the latter would mainly adjudicate disputes and complaints pertaining to the implementation of GST vis-à-vis recommendations of the Goods and Services Tax Council.
He said as a matter of fact the division of powers between the Union of India and the State of Jammu and Kashmir is not on the same footing as it is in respect of other States of the Union. The State of Jammu and Kashmir enjoys special status under the Constitution of India and its Constitutional relationship with the Union of India is governed by Article 370 of the Constitution of India.
Rather said, the union list and the concurrent list of the Seventh Schedule of the Constitution of India as applicable to the State of Jammu and Kashmir are not the same as the Union List and the Concurrent List applicable to rest of the States of the Union. While making Seventh Schedule applicable to the State of Jammu and Kashmir, the State List has been completely omitted and certain entries of the Union and the Concurrent lists have been omitted whereas the State List has been completely omitted. As a corollary, Article 246 and Article 248 of the Constitution of India which govern the division of legislative powers between the Centre and the States apply in a modified form to the State of Jammu and Kashmir.
Whereas the tax laws of all other States draw their sanction from entry 54 of the State List of the Seventh Schedule of the Constitution of India, the tax laws of Jammu and Kashmir State are legislated by virtue of powers derived from Section 5 of the Constitution of Jammu and Kashmir which provides that the executive and legislative power of the State extends to all matters except those with respect to which Parliament alone has power to make laws for the State under the provisions of the Constitution of India. As such the Legislature of Jammu and Kashmir is competent to enact laws for taxing sales which are not only sales simpliciter but also the sales which are indivisible in character.
He said it is in this context that the Legislature of Jammu and Kashmir could bring within its purview of the Tax Law, the Works Contracts and Services and amenities provided by the hoteliers. Subsequently its ambit of tax on services has been enlarged from time to time.
He said presently as many as 20 services are in the tax net. This is in contradistinction to the existing scenario so far as the power to levy tax on the sale and purchase of goods and services is concerned vis-a-vis other States of the country.
He said under the existing provisions of the Constitution of India the Centre alone can levy tax on the services and manufacture of goods whereas power to levy tax on sale and purchase of goods is exercised by the States alone. The Centre derives its power to tax services from Entry 92C of the Union List but this Entry has not been made applicable to the State of Jammu and Kashmir. Accordingly, the State of Jammu and Kashmir alone exercises the special power to tax the services under its residuary legislative powers which no other State of the Union presently enjoys.
Rather said with the proposed insertion of Article 246-A in the Constitution of India through Constitution (One hundred and fifteenth amendment) Bill, 2011 which envisages empowering both the Centre and the States to tax Goods as well as Services, the position of the State of Jammu and Kashmir would be entirely different. Whereas all other States would be surrendering their exclusive authority to tax the sale of goods by allowing the Centre also to tax the sale of goods in their States and in lieu thereof get the additional authority to tax the hitherto out of bounds Service Sector, the State of Jammu and Kashmir which already has the residuary power to tax the sale of goods as well as the services unlike other States would not get any additional authority after allowing the Centre also to tax the sale of goods as well as the services in the State, Mr. Rather said adding that in other words, in respect of all other States there would be a give and take between the Union and the States but in the case of Jammu and Kashmir it would be only give and no take. It is not advisable to tamper with the special powers enjoyed by a politically sensitive State like Jammu and Kashmir. Therefore adequate safeguards need to be incorporated in the proposed Constitutional Amendment Bill in respect of Jammu and Kasmir.
The other potential threat to the special constitutional position of the State of Jammu and Kashmir is from the proposed insertion of Article 279-A and 279-B by virtue of which Goods and Services Tax Council and Goods and Services Tax Dispute Settlement Authority would come into being. One third of the total number of members of the GST Council shall constitute the quorum at its meetings and every decision of the Council taken at a meeting shall be with the consensus of all the members present at the meeting. In order to ensure that no decision with regard to the State of Jammu and Kashmir is taken by the Council notwithstanding the presence of full quorum in the Council meeting and also that no order is passed by the Dispute Settlement Authority which in any way erodes the special constitutional position of the State of Jammu and Kashmir, suitable provisions need to be incorporated in Article 279-A and Article 279-B for the purpose so that no decision of the council is made applicable to J&K without express consent of the State.
In the above backdrop, it necessarily follows that whereas the State of Jammu and Kashmir is a strong votary to the implementation of the most progressive tax reform viz. Goods and Services Tax, the protection of its special status has to be guaranteed by suitable amendments in the proposed Constitution (115th amendment) Bill, Mr. Rather asserted.
The J&K Finance Minister was accompanied by the Commissioner, Commercial Taxes Department, Mr. Kifayat Rizvi and a team of senior officers of the Finance Department.
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