Hectic deliberations continued in Kashmir on Friday to fast track implementation of the Goods and Services Tax (GST) even as the PDP-BJP alliance failed to ensure the crucial rollout along with the rest of country on July 1. The Government decided to resume the Assembly Session on July 4 to seek concurrence of the State legislature for the implementation of uniform tax regime, a pre-requisite for application of any Central law in Jammu & Kashmir in the backdrop of its special constitutional position.
Chief Minister Mehbooba Mufti called upon former Deputy Chief Minister and MP Muzaffar Hussain Beigh to discuss ways and means to ensure smooth passage of GST Bill in the special Assembly Session. Beigh is heading All-Party Consultative Group (APCG) that held two meetings to iron out differences on the GST issue.
The State Government had in an unplanned manner summoned a special four-day Assembly Session on June 17 but it was closed sine die when Opposition parties, including the National Conference (NC), sought amendments to the draft Bill to ensure safeguards to the special status of the State. The PDP-BJP coalition insists that the GST would not erode the special status and fiscal autonomy of the State.
The new five-Day session would be held despite the failure of the Consultative Group to arrive at a consensus to implement the SGT regime.
Meanwhile, several groups of Kashmiri traders called for a general shutdown against the implementation of GST. The traders have threatened to hold sit-in against the new tax regime.
Addressing a Press conference Yasin Khan, president of Kashmir Traders and Manufacturers’ Federation said the traders were not against paying taxes but they resented the implementation of GST that would infringe the special status of the J&K State. “Confusion is being created that traders are against tax. We are against the implementation of GST in the State as it will infringe the special status of the J&K,” he said.
He said that they won’t allow the State Government to implement the Indian law in J&K.
Influential trade body, Kashmir Chamber of Commerce & Industry, in a statement, also opposed any attempt by the Government to “forcibly or clandestinely implementing GST in its present form”. The group said the GST would take away “our financial autonomy enjoyed in terms of Section 5 of the Constitution of Jammu & Kashmir”.
Finance Minister Dr Haseeb Drabu has clarified that the 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 harmonise 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 J&K 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, 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 J&K 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.
Hinting that Opposition to GST implementation would create problems for the State, Beigh to Consultative Group of Thursday that it would open a Pandora’s box. “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’s box which will have huge political ramifications for J&K in future,” he said.