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GST - North Block shows never-die spirit, turns GST Council into recommendatory body to earn States' support

TIOL - COB(WEB) - 200
AUGUST 12, 2010

By Shailendra Kumar, Editor


TODAY's Column is special for both 'The Cob(Web) as well as the GST, a history-in-the-making. For 'The Cob(Web)' it means 'double century' - 200 th piece. TIOL is indeed thankful to its Netizens for making it a worthwhile exercise. For the GST, we are privileged to report that the 'Derailment of Multilateral Dialogue' was a minor mishap which has been efficiently and tactfully overcome. TIOL would like to compliment the Finance Minister and his 'Chosen Seven' for paying attention to what TIOL recommended in the last week's column as the 'Doctrine of Consensus' which should have been the guiding principle for carrying forward the GST talks.

Netizens may recall the unforeseen setback the GST caravan suffered last week when the Empowered Committee of State Finance Ministers almost unanimously dismissed the proposed Constitutional Amendment Bill with an unmistakable shade of contempt. The States had expressed grim reservations on three counts - the preponderance of powers (veto power) in favour of the Union Finance Minister as the Chairman of the proposed GST Council, the rate fixation by the Council, and the decisive role being assigned to the Dispute Settlement Authority (DSA). Although the provisions relating to all the three issues were designed with a bonafide intention to lend stability and decisiveness to the proposed system, but the skeptics among the States could not see eye to eye with the North Block. And their fulminations finally gave the impression to the pedestrian observers that the GST was almost-dead!

But the history-in-the-making never dies like this, particularly when the septuagenarians are devotedly behind it like its shadow. The two of them - Mr Pranab Mukherjee and Mr Asim Dasgupta are blessed with long-term vision and clarity of thoughts. They all the time know that GST is not only good but also for the good of the industry and trade and, not to talk about the Central and States' Exchequers. As, not the irony, but the luck would have it, both of them are not in the same camp. It means there are 'agents of sanity' in both the camps. And when such agents meet, the outcome is often sumptuous. And this is what happened when Mr Dasgupta met the Union Finance Minister late last evening. What transpired between them is not known except some near-precise speculations.

TIOL has come to learn that the North Block played its consensus-inviting master card - a new legal status for the proposed GST Council. In place of an overpowering legal status for the Council as proposed in the Constitutional Amendment Bill last week, the Council has been turned into a 'Recommendatory Body'. If Netizens recall, the earlier Draft had proposed the binding nature of its decisions with veto power resting with the Union Finance Minister. Given the fact that a fresh look taken by the legal eagles has come up with a view that the power to fix the GST rates would always lie with the Parliament, the GST Council cannot assume the role of a super-Parliament as Mr Mukherjee said on the floor of the House that he does not wish to be a 'Super Finance Minister'. And this view has readily been accepted by all, including Mr Dasgupta. Now, there is no need for any veto power for any of the stake-holders. The Empowered Committee is going to meet next Wednesday, and the approval to the amended Draft Bill is expected to be a smooth sailing.

Let's now go to the third apple of dispute - The Dispute Settlement Authority (DSA). True, there would be the requirement of such a body. But a new view has emerged that the present Draft need not talk about it. At best, it can only have some clear-cut contours for a Tribunal which can be given a concrete skeleton with the necessary flesh once the Draft is approved by the Parliament and the State Assemblies. In other words, all the stake-holders would have enough time to mull over the configuration of the proposed body.

In simple words, all the three areas of concern have been ironed out, leaving no space for detractors of all hues. The single goal is to earn the consensus quickly next Wednesday, and the Draft Bill could be tabled in the Parliament before the curtain comes down on the current session. Going by the consensus-driven mood, realising this goal does not look very difficult now.

The Draft Bill apart, the North Block has paced up the speed of its preparations on many other fronts. For 'buttoning up' the provisions of the Model GST Legislation, the 'Gautam Ray Panel' with the help of TRU's two 'bright faces' has been working at a feverish pace. The Empowered Group on IT, headed by Mr Nandan Nilekani, and assisted by Member (Computerisation), Mr Y G Parande, has identified NSDL as its technology partner for the 'Common GST Portal'. The CBEC Chairman, Mr V Sridhar, and Member (Central Excise), Mr S Dutt Majumder, have been working on the enabling administrative structure in the CBEC field formations. The Board has invited views right from the level of Inspectors and Superintendents of the Central Excise Commissionerates on the proposed restructuring suggested by the Working Group headed by the DG (Vigilance). Not to ignore the necessary input of training, the Board has two days back appointed an exclusive ADG at NACEN to work out the schedules and modules of training for officers of all ranks. And finally, let's give due credit to the Revenue Secretary, Mr Sunil Mitra, and Addl Secretary, Revenue Hqs, Mr Jose Cyriac, for playing the proactive role in acting as bridges whenever the talks threatened to break down.

Even as the Centre and the States have been sorting out their differences to roll out the new packaged indirect tax reforms from next fiscal, the prominent faces of the industry and trade which are based in the National Capital, appear to be playing a waiting-game. Although the industry and trade are going to gain substantially from the proposed reforms, the elite business associations like CII, FICCI and ASSOCHAM appear to be standing on the sidelines of the 'rapidly-evolving history'. There are significant roles cut out for them if they indeed wish to pace up the process of GST roll-out. They can play a persuasive role by stepping in whenever one of the parties may look derailing the process of change. The current stages of the making of the GST are very critical and sensitive. All such organisations which can have sobering effect on belligerent parties should come out and stop them from being 'spoil-sport'. No history can be made without involving the actual beneficiaries of the process of change. TIOL would like to see an aggressive and persuasive role being played by our industry and trade. TIOL also hopes that FM's 'Chosen Seven' continue to work relentlessly to take the task to a logical end. Let's hope all the agents of change work together, purposefully and cohesively, to assist the wheels of history for the making of the GST. TIOL as a part of the Press, would continue to lend its support and contribute to all the constructive processes of change which is aimed at the good for the economy and the nation at large. And TIOL would once again like to thank its Netizens for all the support extended to it, in making positive contribution to the process of change.