J&K only state to remain out of GST rollout purview

Srinagar: The Goods and Services Tax (GST) will roll out in the country at midnight but Jammu and Kashmir is the only state which will fail to keep date with it. In view of special status it enjoys under Article 370 of the Constitution, it has to pass special laws to make the umbrella tax that will subsume a string of taxes into one consolidated tax applicable to the State.

The 101 Constitutional Amendment Act of the Indian Constitution under which the GST would be applicable to all States doesn’t apply to J&K as of now.

A consensus is evading the political parties on the issue and all efforts and pleas made by the PDP-BJP coalition government particularly Finance Minister, Haseeb A, Drabu, so far, have failed to convince the opposition which has publicly vowed to fight any move that would weaken further J&K’s special status guaranteed under Article 370 of the Indian Constitution. It has also said that GST would also cause “irreparable financial losses” to the State.

The Kashmir Inc is also up in arms and Kashmir Traders and Manufacturers Federation (KTMF) called for one-day shutdown on Saturday against what it alleged is the government’s agenda to implement GST in the State despite stiff opposition from various quarters. “We will fight it tooth and nail come what may,” its president Muhammad Yaseen Khan said at a press conference.

The separatists, on the other hand, have accused Drabu, of “showing loyalty to Nagpur” by seeking to implement the 'RSS agenda' on Jammu and Kashmir.

The official sources here said that the government is trying hard to build consensus over the GST. A special session of the Jammu and Kashmir Assembly is being held from July 4 to discuss the implementation of GST in the state. A special one-day session was called on June 17 to debate the draft legislation on the GST approved by the State Cabinet earlier issue but it was adjourned indefinitely after the House witnessed noisy scenes.

Till a decision is taken, Jammu and Kashmir will be the only state where a status quo will continue over the GST.

The official sources said that the PDP-BJP government had decided to go ahead with the GST following an appeal was made by Union Finance Minister, Arun Jaitley, who also warned that the State would only suffer in case it fails to implement the GST. But not only is consensus evading the government and the opposition, there is apprehension in the PDP that the issue might be seized by the opposition and the trade bodies for open face-off in the event of which the separatists could only “add fuel to the fire”.

Politically also it is a ‘between the devil and deep blue sea’ kind of situation for the PDP. It is reportedly under tremendous pressure from ally BJP and the Central government to implement the GST in the State but, on the other hand, it is being openly accused by the opposition of trying to weaken further the special constitutional status of the State by seeking to go ahead with the new tax regime.

"It is very sensitive issue. Also, we need to convince ourselves that public opinion matters. If the opposition succeeds in convincing the public on the supposed harm of the GST it may well prove politically ruinous for us," said a PDP leader.        

The government recently set up an all party consultative group under senior PDP leader and former deputy chief minister Muzaffar Hussain Beig who has served also as finance minister in a previous PDP-Congress government. The group met here twice but there has not been any major shift in the already stated positions.

The second meeting of the group was held here on Thursday and Beig said, "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”.

He added, "Besides, it will 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."

Presenting the government's view, Drabu said it 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," he asserted.

Meanwhile, in the absence of GST, there is no possibility of any trade in taxable goods in Jammu and Kashmir.

There will be four sittings of the J&K Assembly on July 4, 5, 7 and 8. The Legislative Council is also meeting separately from on July 4, 5 and 8.

"Hopefully, there will be consensus on the issue and the GST will soon make its way into Jammu and Kashmir too," said an official spokesman.