Dual control model of GST not dealer friendly: Rather

BHUWNASWAR- Describing the meeting of Empowered Committee (EC) of State Finance Ministers on proposed GST held at Odihsa, Bhuwnaswar as an important event to finalize the road map with regard to GST regime, aimed at to usher in economic growth and development of the Country, the J&K Minister for Finance, Mr. Abdul Rahim Rather has sought adequate safeguard to the constitutionally guaranteed special status of Jammu and Kashmir before firming up its recommendations for constitutional (115th amendment) Bill 2011, which is prerequisite to pave way for the switch over to this latest Tax reforms all over the India.            

            Speaking at the crucial meeting of EC of State Finance Ministers, Mr. Rather conveyed State’s main concern on the proposed amendment Bill which needs to be  addressed adequately, before implementation of the GST in the State, adding that the proposed dual integrated model of GST ‘Dual Control’ both by States and Center is perceived as an impediment in the implementation of GST and it is felt this is not a dealer friendly and may not be administratively an efficient tool of recovering the taxes. Mr. Rather said though the State of Jammu and Kashmir has not much of claim  over the CST compensation but it is and has remained irritant between the States and Union of India. Now that the committee on CST compensation has made certain recommendations, as such, I would request that necessary steps be taken to implement these recommendations. This will be a step forward to remove trust deficit between States and Union of India, and will also facilitate introduction of Goods and Services Tax.

            Mr. Rather said that, with the implementation of the Goods and Services Tax regime, the position of Jammu and Kashmir State would be entirely different as compared to the other States of the Union. All other States would be surrendering the exclusive authority to tax goods and, in turn, get the additional authority to tax the hither to out of bound “service sector”. On the contrary, the State of Jammu and Kashmir, being already competent to tax goods as well as services, unlike other States, would not get any additional authority except a share from the Central divisible pool.

            Mr. Rather said, as a matter of fact the division of powers between the Union of India and the State of Jammu and Kashmir is not at the same footing as it is in respect of other States of the Union. The State of Jammu and Kashmir enjoys a 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 as amended vide Constitution (Application to Jammu and Kashmir) Orders, promulgated from to time by the President of India. 

            Mr. Rather said, it is therefore, necessary that before the finalization of its recommendations on the Constitutional (One Hundred and Fifteenth Amendment) Bill 2011, the constitutionally guaranteed special status of the Jammu & Kashmir is not ignored by the Empowered Committee of State Finance Ministers.

            Mr. Rather said, the matter has been considered by the State Cabinet and it has been decided, vide Cabinet Decision No. 137/21/2012, dated 01.08.2012, that after the coming into force of the Goods and Services Tax regime in the country, the State Legislature will consider the enactment of a legislation on the subject in which the State would make provisions  in tune with the GST regime, applicable to all the other States. The components of GST would be levied by the State itself under the proposed legislation, which would be analogous to the statutory framework, proposed by the Union of India for all other States. The State would lay down a mechanism for quantifying the component of CGST and IGST, which the State shall collect for and on behalf of the Union of India  and pass on such component to the Union of India, of course, after the deduction of collection charges and subject to the mechanism as may been envisaged under the State legislation. Such a mechanism will be in conformity with the special constitutional position enjoyed by this State under the Constitution of India as also ensure participation of the State in the proposed GST regime.

            Mr. Rather hoped that today’s meeting will address all the issues  and move forward to firm up the Model GST Act and IGST Act. The Commissioner, Commercial Taxes, Mr. Kifayat Rizvi and concerned senior officers accompanied the Minister.

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