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GST debate: One nation, one tax is a myth, says Veerappa Moily

LiveMint logoLiveMint 29-03-2017 Remya Nair

New Delhi: Union finance minister Arun Jaitley on Wednesday moved the four bills for implementation of the goods and services tax for consideration and passage in the Lok Sabha.

Jaitley explained the need for the four bills while urging Parliament to honour the legislation that has been finalized after the approval of the GST Council—the representative body chaired by Union finance minister and comprising state finance ministers.

“We should look at it as a federal contract with constitutional sanction. We are free to make our recommendations to the council but at the same we will have to honour this federal contract where states and the centre have pooled their sovereignty and arrived at the various provisions of these bills,” he said in the Lok Sabha.

He said the constitution amendment bills empowers the GST council to make recommendations on tax structure, cesses and surcharges, the exemptions as well as the fine prints of all the laws.

The four bills, which are being discussed together are the central GST bill, the integrated GST bill, the union territory GST bill, and the GST (compensation to states) bill.

Leading the debate for the opposition, Congress member of Parliament Veerappa Moily was critical of many of the provisions of the bill.

“One nation, one tax is only a myth. No one can call these bills a game changer. It is just a small baby step forward,” he said.

Moily said that clarity still eludes any of the provisions of the bill including taxation of special economic zones and the way the anti-profiteering mechanism will work.

“Anti-profiteering provision is draconian in nature. It will cause hardships to industry,” he said.

Moily added that the government should try to keep the maximum number of items at the lower slabs to protect interests of consumer and industry.

Moily was also highly critical of the powers of the GST Council.

“The GST Council is only a coordinating body. It is an extension of the executive. It cannot take away the powers of the legislature,” Moily said adding that as per the current wordings of the bill, only the GST council and the Central government matter. “When it is a matter of judicial independence, the judiciary stands up. Is it not our responsibility to protect legislative independence,” he said.

He also said the new definition of the agricultural sector will bring in agriculturists into the tax net through a back door.

The passage of these bills will pave the way for implementation of GST from 1 July 2017. The GST aims to unite the country into a single market by removing tax barriers across states.

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