The central government is moving to be arbitrary on the GST issue

- Under Section 8A, the GST Council is entrusted with the responsibility of handling all matters relating to GST, including taxes, cess and surcharges.

Goods and Services Tax (GST) is not an unknown tax. It is applied in many countries. Its models may be different but the basic structure is the same, i.e. the tax paid in one phase of the supply chain is reimbursed against the remaining tax to be paid in the second phase. Taxes do not compound.

Moderate (Modified Value Added Tax) and then CENVAT (Central VAT) were introduced in India to alleviate the effects of excise duty and service tax. He was doing well. States had to be persuaded to adopt VAT instead of sales tax. CENVET by the Central Government and VAT by the State Governments were conducted independently in their respective administrative areas. However, there were some unresolved issues regarding interstate sales and interstate services. These issues were addressed in the GST system.

Hard work

The task of bringing the Central and State Governments on the same platform was very difficult. The things that were taken into consideration while formulating GST were as follows

-India's constitution is federal in nature and the power to impose taxes was shared between the center and the states.

- Taxes on sales of goods, which were the main source of revenue for the states, were to be enforced by the states.

-The distance between large states and small states was inconsistent,

-The states will have to overcome the fear of losing revenue through compensation payments and have a special mechanism for this, and

- When it comes to making a rule, any decision should be taken unanimously and not that there was such an unwritten agreement based on the outline of the party.

Yashwant Sinha, Pranab Mukherjee and May made every effort to ensure that these matters were complied with. Late. Arun Jaitley was also aware of this but he slipped in tax matters.

The meetings of the Finance Ministers for the formation of GST and the meetings of the GST Council as long as Arun Jaitley was the chairman were smooth and there was no conflict and the GST process continued.

Breakdown

Since Nirmala Sitharaman became the Finance Minister, there has been a struggle in every meeting of the Council and now mutual understanding and trust have completely waned.

The constitutional provisions are clear. Article 8 empowers both the Parliament and the State Legislature to levy GST. However, interstate trade or commerce is an exception. As per Section 6, in case of inter-state transactions, GST may be levied by the Government of India and the distribution of this tax shall be between the States and the Center as recommended by the GST Council. The GST Council has been set up to look into the matter, with the Union Finance Minister as its chairman and a vice-chairman to be elected. Under Section 6A, the GST Council is entrusted with the responsibility of handling all matters relating to GST, including taxes, cess and surcharges. In addition, a dispute resolution mechanism and a weighted voting system have been provided, under which the Center could not exert pressure on the states.

Almost every major matter of the GST Council has collapsed. No vice-chairman has been appointed since the council was formed in 2012. Not a single meeting of the council was held in the six months from October 2020 to April 2021.

The Council has been marginalized by the formation of the GST Implementation Committee of Officers and the Central Government has framed rules as per the recommendations of this committee without taking the Council and the State Legislatures into confidence.

GST was made a weapon

Ahead of the 7th meeting of the GST Council, Manpreet Badal (Punjab's finance minister) raised the above issues and stressed the need to take two steps urgently. 1) Reduction in GST rate on equipment for treatment of corona and 2) Excessive powers given to the GST Implementation Committee. After the council meeting, the finance minister formed a committee of eight ministers to review the demand for reduction in GST rates related to Kovid, in which he excluded three Congress-ruled states and other states by which he had demanded a reduction in GST rates.

In a letter dated June 2, 2021, written by West Bengal Finance Minister Amit Mitra to Sitharaman, it was stated that a total of Rs 2,000 crore was due to the states as GST compensation by January 2021. However, in a TV interview on June 12, Sitaram claimed that the arrears of each state had been paid.

The Modi government is using GST as a weapon to oppress the states. The GST Council has been made like a decorative knot and effective legal powers have been delegated to the GST Implementation Committee and the Center. The arrears of GST and repayment money are being withheld or delayed so that the state governments have to bow to the Center.

The Modi government seems to be looking for a way to be arbitrary on the issue of GST.