Elusive Power Sharing Agreement - No GST on 1st April 2017?
A Member of the GST Council says,
It is confirmed now that GST cannot be implemented on April 1. Parliament has to pass three laws:
1. Central GST
2. IGST
3. Compensation Law
Similarly, the State legislatures have to pass the SGST. The drafts for these four laws have to be approved by the GST Council. The GST Council meeting on 2nd and 3rd, failed. The next meeting is on 11th and 12th. Even if the Council approves the draft legislations on 12th, they cannot be presented to and passed in this session of Parliament which ends on 16th.
What is the dispute? The main issue is on sharing the power to collect taxes by the Centre and the States. Majority of the States want assessees with turnover of less than Rs. 1.5 crore. Those above this turnover are to be shared between the Centre and the States.
This is not acceptable to the Centre. They also want control over the small assessees. Big or small, Centre wants control over all the assessees.
States want control on three grounds:
1. State Governments have more association than the Centre with the small assessees. The States have to bear the ire of the taxpayers which the new tax will bring.
2. It will be difficult for small assessees to face several agencies.
3. There are 2.5 lakh State Government tax officials while there are only 70000 Central Employees. It is logical to hand over the larger number of assessees to State government.
Centre does not agree to this. Their fear is that their power will be weakened. They also argue that in service tax, they too have association with small traders. Further they claim superiority in managing inter-state trade.
On this note, the Council dispersed without a decision. This is unfortunate. The Council had solved far more complicated technical issues, but this power struggle could not be settled. "All these days we have compromised, let the Centre compromise now," seems to be the point of the majority of States.
But GST has to come on or before September 15 2017: Finance Minister Mr. Arun Jaitley sounded the warning bells that the Constitution does not permit delay in GST implementation; So, if as on 16 September 2017, there is no GST, then there is no taxation in the country. Should the biggest tax experiment in the country be held up because we can't decide who should harass the assessees? Maybe we should create a new Indian GST Service which should administer the GST. And what is the great administration these officers, Central and States are going to do when all the activities are going to be online? Maybe for each State, an audit group headed by an Assistant Commissioner level officer with a hundred inspectors can do the job. You need a maximum of 20,000 GST officers for the whole country.