The State Finance Ministers are still consulting on GST format

Dated 20th September, 2014

The Empowered Committee of State Finance Ministers, which has been deliberating on the rollout of Goods and Services Tax (GST), a simplified tax regime, has not consulted the stakeholders in the last five years, although it has visited several countries to "study" the tax structure. The committee, headed by Jammu & Kashmir Finance Minister Abdul Rahim Rather has visited countries like Canada, Japan, France, Spain, Belgium and Luxembourg in the last three-four years, but has not yet made public the GST's proposed format. Central Sales Tax, which was scheduled to be abolished from 1 April 2010 and replaced by GST, as per an announcement in the Union Budget by the then Finance Minister P. Chidambaram, is still in force, complicating the issue. Prime Minister Narendra Modi has asked the Finance Minister to make the entire infrastructure ready for GST to be rolled out from 2016.

"We are the major stakeholders but were never consulted by the committee in the last five years. The committee had come out with a discussion paper in 2009, after which there has not been any attempt to solicit our views despite the fact that traders are the real carriers of the taxation system," said Praveen Khandelwal, secretary general of the Confederation of All India Traders, an umbrella body of the traders of the country.

The committee was set up in 2000. The then West Bengal Finance Minister, Asim Dasgupta was its founder chairman. He was followed by Sushil Kumar Modi. Abdul Rahim Rather took over as the chairman last year after Sushil Modi, who was both Finance Minister and Deputy Chief Minister of Bihar, resigned from the Nitish Kumar government following the severing of ties between the JDU and BJP.

In 2008, the committee submitted a report to the Centre on "A Model and Roadmap for Goods and Services Tax in India" containing broad recommendations about the GST's structure and design. In 2009, the committee released the first discussion paper. However, after that the committee has not done anything to ensure GST's implementation at the earliest. Rather could not be contacted for his comments despite repeated attempts.

According to sources, Prime Minister Narendra Modi is keen that GST is rolled out by April 2016. Last week, he met Finance Minister Arun Jaitley to review the progress made so far in this direction. Sources said that a Constitutional Amendment Bill to give equal power to state and Central governments to enable the introduction of GST may be introduced in the winter session of Parliament.

Khandelwal said that he has written a letter to Finance Minister Arun Jaitley highlighting traders' concerns and is waiting for his response. "Many trade associations have drawn the committee's attention to the various disparities and anomalies in the current VAT (Value Added Tax) taxation system, but no effort has been made to resolve these issues," he said.

He also said that any GST format containing double taxation would not be acceptable to the business community. "We are in favour of a GST taxation system and are ready to cooperate with the government for its early implementation. But it should be based on the basic fundamentals of GST, including a uniform tax law across the country, uniform tax rates in different states and single tax to be administered by a single authority. If such a GST is implemented in the country, only then the taxation system will be simplified and rationalised," he said.