After AIIMS row, it is now the Goods and Services Tax that is pitting Jammu against Kashmir. While the business community in Jammu favours implementation of GST to be rolled out by the centre, in the state, their counterparts in Kashmir staunchly oppose any such move.
The Centre plans to roll out the new indirect tax regime by April 1, 2016. The Constitution Amendment Bill on GST was referred to a Rajya Sabha select Committee for scrutiny after it was cleared by the Lok Sabha.
The implementation of the new tax regime, the Kashmir-based traders believe, would compromise the special fiscal autonomy of the state. But Jammu-based business community argues its implementation would make taxation in the state transparent.
Talking to Greater Kashmir, President, Jammu Chamber of Commerce and Industry, Rajesh Gupta said: "We really fail to understand as to why the state government is opposing the implementation of GST regime."
"GST is in the interest of business community and it would bring transparency in the taxation system in the country," Gupta added, rejecting the argument that the new tax regime would erode special status of JK guaranteed under Article 370, Constitution of India.
"We are not selling the land to outsiders, it is just a law to streamline taxation system in the country and block any pilferages in the tax collection," Gupta added.
Gupta criticized the Valley-based chambers and business associations for what he said the politicizing of the implementation of GST.
"It is unfortunate that chambers and business associations in Kashmir are indulging into politics which is not good for business community," he said.
However, the business community in Kashmir holds a different view. President, Kashmir Chamber of Commerce and Industry, Sheikh Ashiq said the chamber would oppose any move aimed at implementing the GST in the state.
"From day one we have expressed our opposition to implementation of GST in JK, as it would erode the financial autonomy of the state and hamper its special status guaranteed under Article 370."
"We will oppose its implementation tooth and nail. Our priority is to safeguard the special status of Jammu and Kashmir," he added.
Chief spokesperson, Kashmir Traders and Manufacturers Federation, Farhan Kitab said they won't allow any further dilution of Article 370.
"Traders' community is opposing its implementation and no decision about it should be taken without consulting the actual stakeholders," he said.
Jammu Kashmir's Finance Minister Haseeb Drabu, in an interview to this newspaper and later at a lecture at Kashmir University indicated the state may not implement GST that is being rolled out throughout the country soon.
The Finance Minister echoed similar views that have been widely articulated in the state namely that the bill shall compromise J&K's special powers to tax both goods and services; and that under the new regime no powers would be left with the state to tax services – constituting a major surrender of its special financial power.
J&K state had earlier sought incorporation of suitable provisions in the proposed Article 279-A and Article 279 B to provide safeguards to J&K's constitutional position.
That doesn't seem to have happened. By virtue of its own constitution, J&K has the power to tax both goods and services, while as the other states in India have the power to tax goods only. Now, since the new GST architecture will allow the central government to also tax services, J&K's loss is likely to be both political and financial.
The GST in its current form will fetch New Delhi a broader tax base in J&K, and get it more tax resources from this state.
"In its current form J&K will lose what it is able to collect today – both in quantitative as well as qualitative terms. Under the new tax regime the State government may even find it difficult to offer tax rebates to industry and other enterprises. Under these circumstances the state's position is timely and appropriate.".