The government should seek safeguards for protection of Section 5 of the J&K Constitution which gives powers to it to impose taxes and should have a say in imposition of taxes by the Goods and Services Tax (GST) Council, chairman of the Consultative Group of political parties on implementation of GST, Muzaffar Hussain Baig, said on Thursday, echoing the concerns and apprehensions raised by the Opposition over dilution of state's special position.
He made the remarks during the group's meeting on the new tax regime remained inconclusive for the second time today.
Baig said the Article 246-A of the Constitution of India under which the government of India will impose GST should be preceded by the "rider" that the constitutional powers of J&K under Section 5 of the State Constitution shall remain intact so that the state government can exercise its powers on (tax) rates at any time.
"The section 5 rider should be incorporated in the Presidential order which will be issued under Article 370 (for extension of the 101st amendment of Constitution of India to J&K). This mechanism will allow us to replace the law (GST) if we find that we are not benefitted by it," Baig told Greater Kashmir after the meeting.
He said there should be a provision that will make it mandatory on the GST Council, which has powers to decide the tax rates, to seek prior permission of the state government on tax proposal, under Article 370 in case the proposal isn't acceptable to the State.
"This way both Article 370 of Constitution of India (that accords special position to J&K) as well as constitutional autonomy under section 5 of J&K constitution are preserved," asserted Baig, who is a senior PDP leader and a noted constitutional expert.
Baig said he would convey these suggestions to chief minister Mehbooba Mufti for a forward movement on implementation of GST for which the deadline is drawing closer.
Baig said he even proposed these constitutional safeguards during today's meeting as well and, according to him, the representatives of all the political parties agreed to it.
Opposition parties, separatists and Kashmiri businessmen have been repeatedly saying that the GST infringes on J&K's residual political autonomy and its special powers to legislate on financial matters. While the government has tried to reach out to different political parties to try and build a consensus on the issue, it has failed to achieve any breakthrough so far. The government had to also adjourn the special session of the Assembly sine-die earlier this month owing to lack of consensus on the issue. On June 27, union finance minister Arun Jaitley wrote to chief minister Mehbooba Mufti urging for introduction of the GST in the state from July 1, like other states. All states except Jammu and Kashmir have passed the State GST Act.
The state government has been facing flak over extension of 101st Amendment Act of Constitution of India to J&K. The amendment is meant to implement GST uniformly in all the states, but in J&K the opposition has been saying that its implementation would hand over powers to collect taxes to government of India.
To a question about the outcome of today's meeting, Baig said the main opposition National Conference, which was represented by Abdur Rahim Rather, sought safeguards for protection of the fiscal autonomy and Article 370.
"But when I asked him to explain his apprehensions and give suggestions he had none and left the meeting," he said. "He (Rather) said they are against extension of the 101st amendment to the state…they (NC) have no roadmap but only want to create a situation that will lead to dismissal of this government."
Now, Baig said, there were two options with the government– either to take the matter to the Assembly or get the approval from the cabinet in terms of the Article 370, "along with the safeguards that I have suggested."
"It is now for the government to take the call," he said.
According to him, the state government was for the "first time having an opportunity" since 1952 to ensure safeguards for protection of Section 5 of J&K Constitution as well as Article 370.
"We shouldn't miss this opportunity," he said.
According to an official statement, Baig said it was impossible to have separate state law on GST. "If we talk of bringing a separate law, the Centre will have to amend two chapters in the constitution to delegate powers of taxation to the Jammu and Kashmir. It will become a huge political issue across the country. Besides, it will also entail amending Section 5 of J&K Constitution which can't be done. More so, any attempt on fiddling with Section 5 will open a pandoras box which will have huge political ramifications for J&K in future," he said, according to the statement which claimed that parties were "in accord" on extension of new tax regime to J&K but with the constitutional safeguards.
During the meeting, finance minister Haseeb Drabu while presenting the government's view said the government will ensure adequate safeguards for protecting the special constitutional position of J&K as enshrined in Article 370.
"The way ahead to harmonize GST in the state could be by extension of only such limbs of the constitutional amendment 101 to the state which are already applicable to Jammu and Kashmir in one form or the other with some other provisions of technical nature required for harmonization of our taxation structure with the new tax regime," Drabu said.
"In case the GST is not extended to the state, the businesses will be crippled as no trader from Jammu and Kashmir will be able to do business with their counterparts from other parts of the country," Drabu said and added that the consumer in J&K will be the worst hit due to double taxation.
The opposition however said there was no unanimity on GST implementation to J&K and accused the government of failing to come up with constitutional safeguards for protection of state's fiscal autonomy.
"There was no consensus," said NC's Rather. He reiterated that he remained in the meeting throughout the deliberations and left only after it ended, in a clear rebuttal of Baig's claims.
Rather said he confronted Baig and the government representatives for failing to share any "convincing document" about the safeguards to fiscal autonomy of the state.
"We stood by our stand that the GST at the cost of fiscal autonomy and special position is not acceptable to National Conference. Till the government comes up with constitutional, economical and administrative safeguards the GST will not be acceptable to us," he said.
He termed as "white lie" the government claim that there was an accord during the meeting on GST implementation.
Rather said in 2013, during the meetings of empowered committee of GST, "I as finance minister reiterated that the government wouldn't allow dilution of state's special position."
"Drabu sahib as finance minister in 2015 endorsed my stand on the GST and today he shared it in writing during the meeting," he said.
Earlier, the NC's Core Group headed by working President Omar Abdullah reiterated the party's stand of opposing any dilution of the state's fiscal and political autonomy.
During the Consultative Group meeting, J&K Congress reiterated that adequate safeguards should be incorporated in GST regime as was proposed by the cabinet in 2013, keeping in view the special constitutional status of the state.
"Once the tax regime gets enforced across the country, the state legislature should consider the enactment of a legislation in which the state itself would make provisions in tune with the GST regime, applicable to other states and the component of GST would be levied by the state itself under proposed legislation, which would be equivalent the statutory frame work proposed by the union of India for all other States," said a statement issued by the Congress.
Hakeem Yasin of PDF too said there was no consensus on GST implementation in the state. "They are promising everything verbally but there is no written word. The 101st amendment is not acceptable to us in the present form," he said.
During the meeting, sources said the BJP asked for early implementation of the GST, saying there was less time left with the state government.
CPI-M state secretary MY Targami said applicability of the constitutional amendment to J&K would have wide legal and political ramifications as it would mean surrender of powers by the state government to impose tax to the government of India. He demanded that the government should find answers in the laws enacted by the state legislature rather than extending constitutional amendment to the state, adding the government should debate the issue in the Assembly.