‘State’s fiscal autonomy hollowed by new tax regime, S-GST was drafted by Delhi, passed in half-a-minute’
While asserting that Goods and Service Tax (GST) regime passed by parliament has been applied to J&K in “totality” and without any change to protect the state’s special position, opposition National Conference senior leader Abdur Rahim Rather Saturday said implementation of the new tax regime has “hollowed” the state fiscal autonomy.
“We had expressed concerns that GST will erode state’s fiscal autonomy and dilute Article 370. Unfortunately none of these concerns have been addressed in the Presidential Order,” Rather told a press conference here.
Rather, who is the former finance and law minister, said under J&K Constitution the state Assembly had right to impose taxes on goods and services. But, he said the government has allowed extension of Article 246a to the state and given powers to New Delhi to impose taxes as well.
“This (imposition and collection of taxes) was our exclusive right under section 5 of J&K Constitution…it was our sole domain. But now the government of India has got the rights as well,” said Rather.
He said another concern was that the Assembly would lose the right to fix tax rates once GST was implemented in J&K and also the rights to decide on the goods which should be taxed or exempted.
“All these rights have now gone to the GST council. We are left with no power,” said Rather. He was flanked by Party President Farooq Abdullah, general secretary Ali Muhammad Sagar and chief spokesman Junaid Mattu.
According to Rather the powers of the government of India to impose taxes in J&K have been kept intact in the Presidential Order.
“The central GST passed by the Parliament and applied to all states has now been applied in toto to J&K and there has been no change made in the Presidential order in view of the special status of the state,” said Rather.
On Friday J&K Assembly passed the state-GST that paved the way for implementation of the GST in J&K after the Presidential Order, which “ensures protection” to J&K’s special position and Section 5 of its Constitution, was notified by the Government of India late on Thursday night to facilitate implementation of the new tax regime in the state.
Later reading out from the Order, Drabu told Assembly that the powers of Jammu and Kashmir under Section 5 of the Constitution of Jammu and Kashmir shall remain intact and also Article 370 shall be protected.
“The section 5 is there but it has been hollowed now as these powers will be shared by government of India as well,” said Rather.
In J&K, Rather said the main source of revenue was sales tax which would amount to almost 80 percent of the total revenue. “Under the GST the center would now take equal share from these taxes on which they had no power otherwise,” said Rather.
Earlier the government of India would impose excise duty on manufacturing units which, according to Rather, would now be replaced by C-GST. He said the excise duty was levied on not more than 1000 manufacturing units. But now under the C-GST all 72000 dealers from J&K who would otherwise come under VAT have been brought under the C-GST.
“The finance minister said the number of dealers will rise to 1.25 lakh. The center will have now jurisdiction over state to deal with the dealers under C-GST,” said Rather.
He said on the inter-state trade there was Central Sales Tax (CST), which would now be replaced by I-GST.
The CST, Rather said would be imposed by New Delhi but the revenue collection and appropriation was the domain of the state with government of India having no share from it as per the Constitution.
Now under the I-GST the imposition and collection of the taxes will be jurisdiction of the center and it is the Parliament which will now decide the state’s share on the recommendations of the GST council.
“There is no difference now,” said Rather.
He referred to the statements of union finance minister Arun Jaitley and state BJP President Sat Sharma that implementation of GST was the beginning of the process for integration of the state with union of India.
“They are the responsible people and their statements tell it all,” said Rather.
He said there were no safeguards in the Presidential Order as far as the state’s special position was concerned. “There are no safeguards. They will now interfere in our exclusive jurisdiction,” said Rather.
Stressing that the government had passed the GST resolution in the House in hush, he warned the decision to implement GST has serious fallouts on the State.
“The 226-page S-GST bill for J&K was prepared by New Delhi and passed within half-a-minute in the Assembly. This has never happened in the history,” the NC leader said. “I challenge all their members to tell me if they have read a single page of it.”
He hit out at finance minister Haseeb Drabu for his assurances that GST Council would not be able to amend the constitution of the State.
“GST Council cannot amend the constitution of Jammu Kashmir in any manner and so the assurances of the finance minister do not mean anything,” he said.
Rather criticised Drabu for his remarks that the financial integration of J&K with India had been completed in 1956 saying, “Why then did they need to bring the amendments to ensure financial integration of J&K with the state.”
He also defended the party’s decision to boycott the special session of GST saying the government had already made its mind and got a go-ahead from New Delhi to implement the new tax regime.
Rather rebutted the reports that his party had been part of a “fixed match” for allowing passage of the GST. He said the party leaders including general secretary Ali Muhammad Sagar, senior leader Muhammad Shafi (Uri) and provisional president, Jammu, Devender Singh Rana, all spoke vociferously, against the erosion of the special status of the State in the Assembly.