GST Enters Constitution of India
THE Constitution (One Hundred and First Amendment) Act, 2016 has become a reality with the Presidential assent yesterday, making GST a constitutional fact. The Act will come into force from a date to be notified by the Central Government. Different dates can be appointed for different provisions of the Act. It may be relevant to remember that the Eighty Eighth Amendment was never notified and is deleted by the present Amendment (Please see yesterday's DDT). If this is asflaunted, the biggest tax reformsince independence, what was the biggest tax reform before independence?
Now that Parliament has passed the Bill and it is ratified by more than half the States and the President has given his assent, the whole Constitution is in the hands of the Central Government for three years to do anything to make GST workable.
Clause 21 of the Amendment Act states:
Power of President to remove difficulties.
21. (1) If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:
Provided that no such order shall be made after the expiry of three years from the date of such assent.
Restructure GSTN or No GST - Subramanian Swamy:
Dr. Subramanian Swamy tweeted yesterday, "My view of the security disastrous & corrupt friendly GSTN has found wide acceptance in places where it matters. Restructure GSTN or No GST."
Swamy had been very critical of the GSTN. According to him:
+ The most significant player it is obvious, in this tax collection effort should be the one who generates data collection. In this case, that would be the Central and State Governments. Everything else such as adjusting the percentage of GST for various states are just a matter of programming, which could be done by the Government itself through its Department of Electronics. After all, Government has already codified Income Tax. Nothing can be more complicated than that!
+ It may not be possible to implement GST unless private companies are replaced by state-owned firms in the GSTN, the backbone for putting in place the new indirect tax regime.
+ In the "normal" course security clearance from the Ministry of Home Affairs should have been obtained as GSTN would be handling sensitive tax data.
+ The government of India holds 24.5 per cent stake in GSTN while state governments together hold another 24.5 per cent. The balance 51 per cent equity is with non-government financial institutions, like HDFC Bank, HDFC Ltd, ICICI Bank, NSE Strategic Investment Corporation and LIC Housing Finance.
+ Tax administration is a matter that deals with sensitive private information. Being such a large shareholder, this automatically means that HDFC and ICICI will be the bankers of public money collected through taxes. Thus a large amount of money will pass through these banks!
+ GSTN cannot take off unless you first get security clearance. Rajya Sabha Select Committee that scrutinised the GST Bill had said that presence of private companies, with significant foreign holding, in GSTN is not "desirable".