Consensus again eluded the All Party Consultative Group (APCG) constituted by Jammu & Kashmir Government over Goods and Services Tax (GST) implementation. Former Deputy Chief Minister and Member Parliament Muzaffar Hussain Beigh who heads the panel said the non-implantation of the GST will open Pandora’s Box with huge political ramifications for J&K in future.

The group held second meeting till late in the evening on Thursday to arrive on consensus before the uniform implementation of the GST across the country on July 1. Barring J&K, all states are ready to roll out the tax regime.

The Opposition National Conference, separatist groups, traders, and civil society groups have raised questions on the implementation of GST saying that it would erode the special status of J&K.

Beigh, complimented the State Government to have initiated a debate on the issue with all shades of the political opinion to evolve broad-based consensus before J&K is brought under the GSTregime.

"If we talk of bringing a separate law, the Centre will have to amend two chapters in the Constitution to delegate powers of taxation to the state of Jammu and Kashmir. It will become a huge political issue across the country. Besides, it will also entail amending Section 5 of J&K Constitution which can't be done. More so, any attempt on fiddling with Section 5 will open a pandora box which will have huge political ramifications for J&K in future," he said.

An official spokesman said that Core Group meeting held threadbare discussions over the legal, legislative, financial, economic and administrative aspects of the GST regime with the Chairman explaining in detail the nuances of the new tax regime.

Finance Minister Dr Haseeb A Drabu told the meeting that government will ensure adequate safeguards for protecting the special constitutional position of J&K as enshrined in Article 370 of the Indian Constitution.

"The way ahead to harmonize GST in the state could be by extension of only such limbs of the Constitutional Amendment 101 to the state which are already applicable to Jammu & Kashmir in one form or another with some other provisions of technical nature required for harmonization of our taxation structure with the new tax regime," Dr Drabu said.

Regarding GST, Dr Drabu said it would be an integrated tax regime which would replace 16 taxes currently being levied by the Centre and the State Government. The taxes to be integrated under GST include Central Excise Duty, Duties of Excise, Additional Duties of Excise, Additional Duties of Customs, Special Additional Duties of Customs, Service Tax, State VAT, Central Sales Tax, luxury Tax, Entry Tax in lieu Octroi, Entertainment Tax, Taxes of Advertisement, Purchase Tax, Taxes on lotteries, Betting and Gambling and State Cess.

The Finance Minister said the existing tax incentives under the Industrial Policy will be continued and the cross-loC trade can be maintained in the current form. "In case the GST is not extended to the state, the businesses will be crippled as no trader from Jammu and Kashmir will be able to do business with their counterparts from other parts of the country," Dr Drabu said and added that the consumer in J&K will be the worst hit due to double taxation.

Dr Drabu said in the absence of an alternative trading link, J&K is literally integrated with mainland Indian market. Entire requirements are imported from it and everything produced or manufactured in J&K is exported to the same market. “Twin taxation systems dissociated from each other will entail costs to business and to public finance system. Trading processes will be subjected to twin taxation systems making everything costly in J&K, a cost that ultimately the consumer shall have to bear,” he said and added that traders will have to pay more for managing twin systems and it could create a situation that J&K may not get buyers or sellers for its products.

Former Finance Minister Abdul Rahim Rather, who is the former chairman of the Empowered Committee of Finance Minister on GST, said the National Conference is not against the implementation of the GST in the state in principle but the party wants adequate safeguards to protect the fiscal autonomy of the state.