New Delhi: Debunking the stand that GST rate cannot be put on the statute, former Finance Minister P Chidambaram on Sunday said there is a precedent of a tax rate being put in the Constitution besides the powers government has to impose new levies in extraordinary situations.
Dismissing Finance Minister Arun Jaitley’s charge that the Congress party was stalling passage of the Goods and Services Tax (GST) Bill for “collateral reasons”, he said the party was ready to cooperate with the government but has not heard from it after the meeting between Prime Minister Narendra Modi and Sonia Gandhi last month.
“If the Government had constructively engaged with the Congress on its three principal objections since the beginning, the bill could have been passed by now,” he told PTI here.
Chidambaram said Chief Economic Advisor Arvind Subramanian’s report on GST endorses two out of the three demands of the Congress — there should be no one per cent additional levy on inter state goods movement and the GST rate should not be more than 18 per cent.
On Jaitley’s stance that the tax rate cannot be cast in stone by including in the Constitution, he said there is a precedent when Professional Tax rate of Rs 2500 was included in the Constitution.
“There is a precedent in the Constitution where the Professional Tax rate was capped at Rs 2500. It is not unprecedented. If the Government does not provide a cap in the Constitution Amendment Bill than it must be provided in the GST Bill. No tax can be levied without specifying the rate,” he said.
In case of extraordinary situations like natural calamities, the government always has powers to bring a new levy. Also, the income tax as well as customs duties are not being subsumed in the GST and they can be raised to mop up funds for special circumstances, he said.
Explaining the reasons for the Congress demand, Chidambaram said the cap has to be in the Constitution Amendment Bill so that no government can increase the rate arbitrarily.
“Our experience is that governments including the Congress government in the past have tended to increase the rates in small dozes. The GST is a regressive indirect tax and there cannot be any justification for saying it should not be put in Constitution Bill.
“Bring another tax. You have the power under Entry 97 List-1. Increase income tax, increase customs duty or impose a calamity tax,” he said.
Chidambaram, in a series of tweets, agreed with Jaitley that a delayed GST bill is better than a flawed one, contending that the present bill is “flawed”. “Agree with FM @arunjaitley. A delayed GST is better than a flawed one. Present GST Bill is flawed,” he said a day after Jaitley indicated at a FICCI gathering that passage of Goods and Services Bill may not be possible in the Winter session of Parliament and that a delayed bill is better than a flawed one. Chidambaram asked the government to accept three “weighty objections of Congress so that the bill could be passed. “Congress’ three weighty objections & the bill could be passed. One per cent tax is anyway dead. Scrap the provision,” he said in another tweet.
In the interview to PTI, he said, “The power to impose new tax lies with Parliament under Entry 97, List-1. As long as that power is there, in an extraordinary situation like natural calamity, you can impose a calamity tax. Why are you keen to tinker with the GST rate.”
Asked about the November 28 meeting Modi had with Sonia Gandhi and former Prime Minister Manmohan Singh on the GST, he said, “All I know is that they told Dr Manmohan Singh and Mrs Gandhi that the government will come back with revised formulations. We have not seen any revised formulations. It is almost a month now.”
To a query how could the ice be broken and whether Congress would accept if the rate is put in GST bill, “We must see the revised formulation of the Government on the three principal objections raised by the Congress party and there are some minor objections. We need to see how government responds to those minor objections also.”
Asked whether the April 2016 deadline for roll-out of GST would have to be given a go-by, he said shot back “I dont know who imposed that deadline. To begin with it was an unrealistic deadline. Because after the Constitution Amendment Bill, every state has to pass a legislation.” To a question as to what would be the point at which the deadlock could be broken, he said, “we must see the government’s response.” (PTI)
