GST Deadlock Deepens as NC, Kashmir Inc Oppose Move

Srinagar: From business groups to opposition parties in the Assembly to separatist leaders all have unanimously come out in unison to oppose the introduction of Goods and Service Tax (GST) in Jammu and Kashmir in its current form saying it will erode the state’s fiscal autonomy.

This deadlock has now cast a shadow on special session of J&K Assembly that is scheduled to meet from June 17 to discuss the GST implementation.

State Government on Tuesday had claimed that a consensus has been reached on the GST at the all-party meeting which was chaired by the Chief Minister.

Entire opposition alleged that the coalition PDP-BJP Government presented no roadmap about the implementation of the tax regime and cautioned that it would be a compromise on the financial and political autonomy of the state.

National Conference on Wednesday said the party would not support the extension of the GST regime to the State of Jammu and Kashmir in its present form at any cost and would leave no stone unturned to protect the State’s fiscal and political autonomy.

Addressing a press conference here, senior NC leader and former finance minister Abdul Rahim Rather alleged that the State Government was ‘confused and completely clueless’ on this very sensitive issue.  “National Conference Core Group met recently in Srinagar and discussed the issue of GST and reached a conclusion that as far as the GST is concerned and of the amendment through which the GST is being implemented, accepting the GST in its present shape and form – it would cause irreparable damage to the State’s special status, its fiscal as well as political autonomy. The State Government has failed to come up with a clear and transparent stand on this issue leading to uncertainty and apprehensions”, the NC leader said.

“We sought an All Party Meeting with the expectation that the State Government could clarify its stand on GST. Sadly the State Government is completely confused and clueless. Even in the meeting, the State Government could not clear its stand. The stand of National Conference is unambiguously clear – we will not allow the State Government to take any step that would compromise on the State’s fiscal autonomy and special status”, Abdul Rahim Rather said.

The former finance minister quoted Dr. Haseeb Drabu, the State’s finance minister from his archived write-ups and quotes from the 15th of August, 2013 and 22nd of May , 2015 in which he has clearly opposed the extension of GST to the State in the form that has been passed by the Parliament and implemented in other States.

[[{“type”:”media”,”fid”:”18806″,”view_mode”:”wysiwyg”,”instance_fields”:”override”}]]

“Dr. Haseeb Drabu in his write-up in Daily Greater Kashmir on the 15th of August 2013 opposed the implementation of GST in its present form by saying ‘Come GST and neither the State Legislature nor the State Cabinet will have any say in J&K taxation’. Ironically the sub-title of the said write-up was ‘Come GST and neither the state legislator nor the state cabinet will have a say on J&K taxation’. In the said write-up, Dr. Drabu went on to add – ‘Indeed, if GST, in its present form and shape, is implemented in J&K, neither the state legislature nor the state cabinet, let alone the Finance Minister, will any longer have an unfettered say on taxation under the GST regime. They cannot unilaterally cut taxes or prevent tax hikes. To add insult to injury, in the proposed framework the Union finance minister can shoot down any proposal coming from the state on tax rates, goods to be left out of GST. That this should happen to the most “empowered” state legislature, i.e J&K, which has residuary powers, is an irreparable loss’. There are various other instances where he has opposed the implementation of GST in J&K in the present form which is a matter of record”, Rather added. 

“Even in the All Party Meeting, PDP Vice President and Member of Parliament, Muzaffar Baigh Sahab agreed with the points raised by National Conference and gave a clear indication about the state of confusion and ineptness of the State Government. The glaring contradictions put forth by the State Government are shocking”, the Senior NC Leader said. 

“It was the duty of the State Government to be transparent about this issue and make us all aware about the realities and ramifications of GST for Jammu and Kashmir. Unfortunately the State Government has chosen to keep its stand veiled and secret in an attempt to mislead the people and distort the truth. Implementing GST in its present shape and form will have far-reaching adverse consequences for the State’s fiscal and political autonomy and because of the seriousness of this issues, the State Government should have been more responsible and conscious of its duty”, the former Finance Minister further added. 

Addressing the Press Conference, the Former Finance Minister said the State Government’s contention that the implementation of the GST regime in its present form would not affect the State’s fiscal autonomy nor supersede Section 5 of the Constitution of J&K is a false and wrong assurance. “Before the Constitutional Amendment 101 to the Constitution of India, the Central Government could only impose tax on the manufacturing of goods in form of excise duty. The Central Government had no right to impose taxes within the State on intra-State sales of goods within the State. Through this Constitutional Amendment 101, the Central Government now has the right to even impose taxes on intra-State sales in all States, except Jammu and Kashmir. Till here, this was an exclusive domain of the States”, Rather said.

“The other States were benefitted in some areas by implementing the Constitutional Amendment 101 in the particular States. Prior to the amendment the States did not have a right to tax services but they were provided with that right post the amendment. But as far as J&K is concerned, J&K had the power to tax both sales and services although GoI had made a law earlier in 1994 to tax services through the Central Government. J&K did not apply this tax to save the people from over-taxation and chose to tax services within the State at reasonable, enabling rates”, Rather added. 

“Now, if the Constitutional Amendment 101 is extended to the State of J&K to facilitate the implementation of GST in its present form as passed by the Parliament of India, the Government of India will get the power to impose such taxes in J&K. Till now the said amendment is applicable to the entire country except J&K – thanks to Article 370 of the Constitution of India. No Central Law doesn’t apply to the State directly until we either apply it or pass the relevant bill in the State Legislature. Post 1977, when National Conference came to power, the party has not allowed a single Constitutional Amendment to the applied to the State and we will continue to oppose such applications and extensions”, he added. 

“If GST in its present form is implemented in the State, the people of the State will be liable to be taxed under GST instead of the indirect-taxes regime like VAT, Sales Tax etc applicable in the State as of now. But, since the State Government has failed to deal responsibly with the situation well in advance, come 1st of July when GST comes into force, the people of J&K could possibly be taxed for both GST  and the indirect taxes applicable in the State.”, the Former Finance Minister said. 

“Dr. Drabu’s assurance to stakeholders that the State Government would take care of all concerns and apprehensions of the local business community viz-a-viz rates of taxation and other issues is factually incorrect and misleading. The GST bill has been passed by the Parliament and the taxation rates and classifications thereby are decided upon by the Central GST Council which is headed by the Union Finance Minister. While the State Finance Ministers are members of the Council, the power of deciding about taxation rates and classifications moves entirely from the State to the Centre. To say the State Government will be able to exert any concrete and official influence is a distortion. The State Finance Minister, the State Legislature nor the State Cabinet won’t have any right to revise the GST law or the rates”, he added in the Press Conference. 

[[{“type”:”media”,”fid”:”18743″,”view_mode”:”wysiwyg”,”instance_fields”:”override”}]]

“The State will have to abide by the same rates that are decided by the Central GST Council. If you read the Constitutional Amendment 101, it makes it evidently clear that the sole decision rests with the GST Council – the GST Council in itself being a product of the amendment.  Increasing or decreasing the rates will be decided by the GST Council. Even exceptions and breaks will be decided in the GST Council. If any changes have to be made in the State GST, the decision will rest with the Central GST Council headed by the Union Finance Minister. Till today of the J&K Government wanted to make any changes in the State indirect taxes like VAT and Sales Tax, the Government had to bring a bill for the specific purpose in the State Legislature. Now, if GST is implemented in its present form, that power will move to the Central GST Council. This is the procedure for making any changes in the State GST. As far as the Central GST would be concerned, the State would have no power to even discuss this. When the Finance Minister says that the State Government would help in needed revisions and tax-rate classifications, that is a gross distortion of the truth. The State Government will lose all such powers completely and totally”, the Senior NC Leader said.

“For example the Tourism Industry convinced the State Government that a tax on hotel tariffs is a disadvantage for the tourism sector and affects it adversely. Conceding to this genuine request, the State Government did away with this tax. However, the State Government will lose its power to take any such decisions if GST is implemented in its present form – under which hotels will be taxed for their room tariff as high as 28% for the higher category of classification. One can only imagine the consequences of this on our Tourism Sector when the State Government will have no power to affect such changes. All such decisions will have to be moved to the Central GST Council”, Abdul Rahim Rather added.

“The State, till now, derives its power of taxation from Section 5 of the Constitution of Jammu and Kashmir. And the Central Government as well as other States used to derive this power from the Parliament. Today if we apply Constitutional Amendment 101 in the State, especially through Section 246-A, then the power of indirect taxation will be derived from the Constitution of India as opposed to the Constitution of Jammu and Kashmir. Till that extent, the Section 5 of the Constitution of Jammu and Kashmir will be superseded and rendered irrelevant. The political autonomy is thus violated and the power moves to the Parliament of India and the Constitution of India”, the Former Finance Minister said. 

“The other contention of the State Government that there won’t be any affect on Article 370, the Article and the Constitution clearly defines the limits of the jurisdiction of the Parliament of India to extend, apply or amend laws in J&K. The powers that rest with the State are residuary powers. But when you increase the power of the Central Government and the Parliament to make and change laws in J&K, there will be a direct constitutional disempowerment of Jammu and Kashmir. Hence this contention and assurance too is wrong. Both Article 370 and Section 5 of the Constitution of J&K will be affected if GST is implemented in its present form”, Rather added. 

“As long as the taxation system applicable in the State today is concerned, the Department of Commercial Taxes for instance is the body where such appeals, cases and disputes are listed and where such registrations are made. But once the GST regime is extended, the power of implementation and supervision too moves to the Central Government – meaning the power and authority of Tax Administration moves away from the State and to the Government of India”, the Former Finance Minister said. 

“The constitutional amendment 101 was passed by the Parliament last year, with the President giving his ascent in September. The question of applying GST to the State of J&K is a question that can be raised post the extension of this particular amendment. Once the Constitutional Amendment was passed, it became applicable in the country with the exception of Jammu and Kashmir. The role of the State Government in this regard starts from 2016, post passing of the constitutional amendment 101. The empowered committee I headed on GST was a consultative committee that was convened prior to the passage of the constitutional amendment. Even in this empowered committee, we repeatedly made it clear that the extension of the constitutional amendment to J&K at a cost to its autonomy would not be allowed. Muzaffar Baigh Sahab read these excerpts from the empowered committee on GST in his speech in the All Party Meeting yesterday and said my commitment there is the commitment of all stakeholders in the State”, Rather further said. 

[[{“type”:”media”,”fid”:”18744″,”view_mode”:”wysiwyg”,”instance_fields”:”override”}]]

“If the amendment was passed in August last year, the State Government knew that their role started from then in deciding if this amendment would be made applicable to J&K or not and what the State Government’s strategy should be. Finance Minister of Government of India gave 6 months time to all States to make relevant preparations to make State GST laws. As far as J&K is concerned, we had to first take the decision if GST regime would be made applicable to the State through Constitutional Amendment 101 or not in the first place and any consequent decisions and steps depended on this. The J&K Government remained inactive and irresponsible despite the extension of the deadline to the 1st of July, when GST becomes applicable. The State Government had ten months in which it chose to do nothing. The Government now wants to do in ten days what it didn’t in ten months – creating the ensuing atmosphere of confusion and chaos”, the Senior NC Leader added.    

“The present Government brought the GST bill to the Cabinet and approved it there – as was reported by the media. Our question is this – if the Govt hasn’t decided if GST will or won’t apply to the State (for which a Special Session of the LA has been convened) – what is the utility of bringing a bill to the Cabinet and approving it? It is evident that the State Government has made up its mind to extend the GST regime in its present form to the State despite a complete and stiff opposition from all political and economic stakeholders in the State. The height of this confusion is that a notification was issued from the Commercial Taxes Department asking people to register as per the new GST law till the 15th June. When there is now such law, and none has been passed by the Assembly – what registration is the State Government seeking and under which new law?” The irony is that the State Government is seeking registration under a non-existent law”, Abdul Rahim Rather asked. 

Kashmir Inc in Opposition Camp

The Kashmir Chamber of Commerce & Industry (Inc) on Wednesday said that implementation of the Goods and Services Tax (GST) will deprive Jammu and Kashmir of its financial autonomy and its powers to legislate on the financial matters of the state.

“Extension of such laws to the state of J&K amounts to direct infringement with the special status of the state guaranteed and vowed to be maintained under Article 370 of the constitution of India,” KCC&I said, in a statement today.

It said that they have made it clear in the meetings with Chief Minister Mehbooba Mufti and Finance Minister Haseeb Drabu that GST law “shall in no way be acceptable as it tantamount to erosion of the special status of the state of J&K.”

Kashmir Economic Alliance (KEA) meanwhile has called for Secretariat Gharoo on 17 June, against implementation of GST in Jammu and Kashmir

In a statement, KEA Co Chairman Farooq Dar expressed serious concerns over this issue and said, business community and the people would fight tooth and nail to oppose GST implementation in the State.

“We are not against any tax regime which is for the betterment of the business community. But J&K state is not like any other state in India. It has as special status guaranteed under article 370 under which this law can’t be implemented here,” said Dar.

“State and the GoI needs to take people and business community on board before GST is implemented ths state, he said.

Follow this link to join our WhatsApp group: Join Now

MONTHLY	Rs 100
YEARLY	Rs 1000
LIFETIME	Rs 10000

CLICK FOR DETAILS