The second meeting of the All Party Consultative Group constituted by the Government to evolve consensus over GST implementation in J&K was convened here this evening under the chairmanship of former Deputy Chief Minister and Member Parliament, Muzaffar Hussain Beigh.
The members of the Consultative Group including former finance minister and NC leader Abdul Rahim Rather, CPI (M) state secretary MY Tarigami, Congress leader Aijaz Ahmad Khan, Hakim Mohammad Yasin of PDF, Nizam-ud-Din Bhat of PDP, Advocate Sunil Sethi of BJP, Ghulam Hassan Mir of DPN and independent legislators, Er Rashid and Pawan Gupta attended the meeting.
Chairman of the group, Beigh, complimented the State Government to have initiated a debate on the issue with all shades of the political opinion to evolve broad-based consensus before Jammu and Kashmir is brought under the Goods and Service Tax regime.
“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 state of 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 pandora box which will have huge political ramifications for J&K in future,” he said.
Minister for Law and Justice Abdul Haq, Chief Secretary BB Vyas, Commissioner Secretary Finance Navin K Chaudhary, Commissioner Commercial Taxes, Parvaiz Iqbal Khatib and other officers of the Finance and Law Departments were present in the meeting.
The meeting held threadbare discussions over the legal, legislative, financial, economic and administrative aspects of the GST regime with the Chairman explaining in detail the nuances of the new tax regime.
Presenting the government’s view, the Finance Minister Dr Haseeb A Drabu said the government will ensure adequate safeguards for protecting the special constitutional position of Jammu and Kashmir as enshrined in Article 370 of the Indian Constitution.
“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 another with some other provisions of technical nature required for harmonization of our taxation structure with the new tax regime,” Dr Drabu said.
Regarding GST, Dr Drabu said it would be an integrated tax regime which would replace 16 taxes currently being levied by the Centre and the State Government. The taxes to be integrated under GST include Central Excise Duty, Duties of Excise, Additional Duties of Excise, Additional Duties of Customs, Special Additional Duties of Customs, Service Tax, State VAT, Central Sales Tax, Luxury Tax, Entry Tax in lieu Octroi, Entertainment Tax, Taxes of Advertisement, Purchase Tax, Taxes on Lotteries, Betting and Gambling and State Cess.
The Finance Minister said the existing tax incentives under the Industrial Policy will be continued and the cross-LoC trade can be maintained in the current form. “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,” Dr Drabu said and added that the consumer in J&K will be the worst hit due to double taxation.
Dr Drabu said in the absence of an alternative trading link, J&K is literally integrated with mainland Indian market. Entire requirements are imported from it and everything produced or manufactured in J&K is exported to the same market. “Twin taxation systems dissociated from each other will entail costs to business and to public finance system. Trading processes will be subjected to twin taxation systems making everything costly in J&K, a cost that ultimately the consumer shall have to bear,” he said and added that traders will have to pay more for managing twin systems and it could create a situation that J&K may not get buyers or sellers for its products.
Former Finance Minister Abdul Rahim Rather, who is the former chairman of the Empowered Committee of Finance Minister on GST, said the National Conference is not against the implementation of the GST in the state in principle but the party wants adequate safeguards to protect the fiscal autonomy of the state.
Congress’s Aijaz Ahmad Khan said his party has piloted the evolution of Goods and Service Tax regime across the country. “Our party has laid the foundation of GST. We are in favour of it but we are concerned about how it is implemented in J&K. The law must be introduced in an applicable form in the state,” he said.
Seconding Mr Baig’s viewpoint, Tarigami said consultations are beneficial for evolving a consensus but stressed that Article 370 should not be belittled. “We have to take people along to preserve the relationship between India and J&K. I congratulate the government for debating the issue with us,” he said.
There was a general consensus in the meeting that non-implementation of GST regime would trigger economic and financial chaos in the State with the inter-state trade vis-a-vis J&K taking a big hit.
The All Party Consultative Group had earlier met here on 24 June to discuss the issue.