Economy

J&K Likely to Clear GST by July 6; Trade Bodies, Civil Society Remain Opposed

The opposition opposes extending the 101st amendment of the constitution to J&K, which would hand over powers of tax collection to the Centre and threaten the state’s autonomy.

Jammu and Kashmir chief minister Mehbooba Mufti. Credit: PTI

Srinagar: Jammu and Kashmir, the only state that failed to meet the June 30 deadline for the implementation of the goods and services tax (GST), is now likely to clear the legislation on the indirect tax regime by July 6, state finance minister Haseeb Drabu said on Friday.

Earlier, the PDP-BJP coalition had failed to come to a consensus on the implementation of the GST regime in the state at the all-party meeting on June 29, with Valley-based trade bodies and civil society forums issuing a threat to launch a civil disobedience movement if the government goes ahead with the plan.

According to local media reports, several trade bodies have called for a ‘Kashmir bandh’ on Saturday, July 1.

“The business community is ready to face losses but won’t allow implementation of GST in its present form,” said Muhammad Yaseen Khan, president of Kashmir Traders and Manufacturers Federation.

For the Mehbooba Mufti government, which is struggling to contain the street protests in Kashmir, the adoption of the GST has become a nerve-racking challenge with concerns being raised that the new tax system, aimed at integrating the states with the union fiscal system, would lead to an erosion of the state’s fiscal autonomy and deal yet another blow to Jammu and Kashmir’s special status.

Even as the government – which hasn’t done enough so far to address the apprehension and reassure on safeguarding Article 370 – seems clueless on how to move forward as Kashmir, in the words of legislator and chairman of the People’s Democratic Front Hakeem Muhammad Yasin, could be staring at another agitation over the controversial taxing law.

Growing opposition to Center’s ‘overreach’ 

The controversy has been simmering in Kashmir since New Delhi’s announcement that it was going to roll out the new tax regime.

This opposition is more against the extension of the 101st Amendment Act of the constitution to J&K that would bring the state under the ambit of Article 246A, which empowers the Centre to impose the GST. The amendment is meant to implement GST uniformly in all states, but in J&K, the opposition has been cautioning that its implementation would hand over powers to collect taxes to the government of India.

Senior National Conference leader and former finance minister Abdul Rahim Rather, who attended the June 29 all-party meeting, warned that J&K would suffer “irreparable political and financial losses” if the 101st Amendment Act was implemented in the state in its present form.

“Our consistent stand has been that GST at the cost of fiscal autonomy and special status is not acceptable. Let the government come up with the roadmap to safeguards our constitutional position, we are ready for discussion,” Rather, who was also the chairman of the empowered committee on GST, told The Wire.

According to Rather, the state is constitutionally empowered to have its own law on GST for collection of taxes and their sharing with the Center. However, former deputy chief minister Muzaffar Baig, who is the chairman of the all-party group, said bringing a separate law in J&K would become a huge political issue across the country.

“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 Jammu and Kashmir. Besides, it will also entail amending Section 5 of J&K constitution, which can’t be done… Any attempt on fiddling with Section 5 will open a Pandora’s box which will have huge political ramifications for J&K in the future,” Baig cautioned while revealing that that he has suggested measures to the government for ensuring protection of state’s powers under Section 5 of the J&K constitution.

This has, however, done little to assuage the apprehension raised by the political parties and trading bodies.

“The government is promising everything verbally but there is no written word. The 101st Amendment is not acceptable to us in the present form. And instead the government should find answers in the laws enacted by the state legislature,” said leftist leader M.Y. Tarigami.

Civil society and trade bodies join the chorus

However, it is not only the political parties who have opposed the GST, the civil society as well as trade bodies have now put their foot down on the matter arguing that application of GST would be the “biggest-ever assault” on the state’s autonomy in the past four decades.

“Once the GST is implemented, the state would lose its law-making powers on taxation matters and the parliament would then make laws on indirect taxes for J&K and the GST Council would decide on tax rates for us,” former high court judge Hasnain Masoodi said at a round table conference that was called by the civil society formation, Kashmir Centre for Social and Development Studies on Thursday, June 29.

Among those who participated in the meeting included Concerned Citizens Group, RTI Movement, Coalition of Civil Societies, National Conference, CPI-M, PDF, AIP, KCCI, FCIK, KEA, KEF, KTMF, CCIK, Young Entrepreneurs’ Forum and several academicians, trade experts and lawyers.

Meetings without consensus

The June 29 all-party meeting was the third such attempt by the government to try and build political consensus on the GST implementation. Prior to it, the government had to adjourn sine die the special session of the assembly that was called to debate the tax law but witnessed only political slugfest over the matter.

“We will neither compromise on Section 5 of [the J&K constitution] nor the Article 370,” Drabu told The Wire.

But one of Drabu’s and his government’s criticism is that while they have been reiterating to ensure “enough safeguards both legislative as well as constitutional in accordance with the state’s special position”, they have not so far explained how they would go about it.

“We have been asking them to share with us the roadmap for safeguarding our constitutional position but in the documents that they shared with us a few days ago there are no assurances which could have satisfied us,” said state Congress chief G.A. Mir.

According to Drabu, non-implementation of GST in J&K will likely have fallouts. “We can’t live in an isolated economy besides our traders will become liable to double taxation.”

But when he was asked during a press conference on June 28 whether his government has the commitment from the Centre about protection to the states fiscal autonomy he had responded saying “Specifics are not discussed in public forums”.