The face-off between the
Centre and states over the Constitutional amendment for
introducing the Goods and Services Ttax (GST) is set to
delay and derail the schedule for implementation of the
new indirect tax regime from April 1, 2010.
The draft for the amendment has still not been agreed
upon by the two as there is still no consensus on contentious issues like
placing the GST under the concurrent list or in a combined list of the centre
and state. Finance minister Pranab Mukherjee will meet law minister Veerappa
Moily tomorrow along with the solicitor general, law secretary, legislative
secretary, revenue secretary and other department officials to find a way out of
the stand-off. “We are stuck with the situation. There are two options for
introduction of the GST in the Constitution. One is to put it both under the
state and centre, where the central law prevails over the state. The other is to
put it under the concurrent list. There has been no agreement on the issue so
far in both the options,” official sources told The Indian Express.
The other hurdle plaguing the discussions is the creation of a body that will
harmonise between the centre and states on various issues which may arise in the
future. The contentions eclipsing the process of finalising the draft amendment
are issues such as how to create the body, who will head it, what would be the
mandate of the body, etc.
The body will have representation from both the state and centre and it will
coordinate in the GST implementation.
States have been crying foul over the fact that their fiscal autonomy would be
impacted by the move. They have not been able to reach a consensus over which
list the GST should be put in. Also, they have not been able to decide on issues
like who will head the body. In fact, it has still not been decided that whether
the body would be empowered to penalize in case of breach of the legislation.
“These works have not been done. We will take up the issue in the meeting. The
very purpose of this meeting is to find a solution and bring about a consensus,”
the sources said.
The Constitutional amendment is the first step towards the introduction of the
new indirect tax regime which will subsume all central and tax levies and reduce
the cascading effects of taxes.
Constitutional amendment will empower the centre to levy tax on sale of goods
and states would be able to tax services. Presently, the centre can tax only
manufacturing of goods and services, while states can tax only sale of goods.
The proposed amendment is likely to be done in Schedule VII of the Constitution.
