With Cong on board, govt set to fast-track GST

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The government has reached an agreement with the Congress on the contentious issue of dispute resolution mechanism under the goods and services tax (GST) regime, raising hopes for the passage of the Constitution amendment Bill in the Rajya Sabha slated for early next week. However, AIADMK, which has 13 members in the Upper House, was yet to come on board.

According to the agreement, the dispute resolution mechanism will be made more categorical in the Bill than the legislation which was passed by the Lok Sabha in 2014. The Congress, however, said it wanted to see the final print on the wording of the dispute resolution mechanism before committing its support to the Bill. The mechanism would remain under the domain of the proposed GST council, which would comprise of Union and state finance ministers.
The Congress also wants that the GST rate be “ring fenced” in the GST Bill, which will come up after the Constitution amendment Bill is cleared by Parliament and ratified by at least half of the states. The leading opposition party believes that the GST would become meaningless if the rates were to go above 20 per cent. It also wants that the rates should be changeable only through finance Act and not by a notification.

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“We have reached an agreement with the government on GST, but will like to see the language in the final version before we take a stand,” Anand Sharma, deputy leader of the Opposition in the Rajya Sabha, told Business Standard. He said the Congress wanted a strong and firm language in the Constitution amendment Bill on the dispute resolution mechanism.

“We have asked for mandatory establishment of the redressal mechanism by the GST council. The language currently says that the GST council may decide the modality of the redressal mechanism.”

Finance Minister Arun Jaitley has agreed to accommodate the demand, the former commerce and industry minister said. “We have in-principle reached an understanding on GST, but will take a call after reading the final language of the Bill to be tabled in the Rajya Sabha,” he said.

The Congress had earlier demanded an independent dispute resolution authority, headed by a high court judge. But, with states not accepting the demand, the Congress has come on board that the mechanism could remain under the domain of the proposed GST council, sources said. The Congress has had five meetings with the finance minister over the issue of GST. Also, the Congress is said to have held a meeting at the residence of party president Sonia Gandhi over the issue.

Sharma said the Congress has categorically told Jaitley the GST rate should be legally “ring fenced” in the GST Bill. “We want to know the rate, which will be there in Central GST and State GST. It can’t be left to executive arbitrariness. So each time the rates are changed, it should be done through the finance Act and not a simple notification.”

He said while no clarity has emerged on the rates, the party will wait over the next few months till the winter session. “If you go above 20 per cent, GST becomes meaningless,” he said.

The government hopes to introduce the Central GST Bill in the winter session. The government has already accepted the Congress demand of scrapping the proposed one per cent additional tax over GST on inter-state supply of goods in the Constitution amendment Bill. The Cabinet has approved this amendment after state finance ministers gave go-ahead.

However, the All India Anna Dravida Munnetra Kazhagam (AIADMK) continues to hold out against the Bill. Till Friday night, AIADMK supremo and Tamil Nadu Chief Minister J Jayalalithaa had not communicated her party’s stand on the Bill.Meanwhile, speaking at an event in New Delhi, the finance minister said “This whole idea of one nation one tax is extremely important for India in not only reducing the level of tax but also for providing an ease (of doing business) and eliminating any forms of corruption.”