THE ROAD SO FAR
To set the stage for the ambitious reform legislation, the Union Cabinet under the leadership of Shri Narendra Modi ji on 17th December, 2014 approved the proposal for introduction of a Bill in the Parliament for amending the Constitution of India.
The Constitution (One Hundred & Twenty Second Amendment) Bill, 2014 as proposed under Bill No. 192 of 2014 containing 21 clauses was introduced by the honourable Finance Minister Shri Arun Jaitley jion 19th December 2014 in the 16th Lok Sabha. The Bill was passed by the House on 6th May 2015, receiving 352 votes in favour and 37 against it. All 37 no votes came from members of the AIADMK. The Indian National Congress party opposed the Bill and walked out from the Parliament.
The Government attempted to move the Bill for consideration in the Rajya Sabha on 11th May 2015, however, members of the Opposition repeatedly stalled the proceedings of the house. In order to appease the Opposition's demand for further scrutiny of the Bill, Mr. Jaitely moved a motion to refer the Bill to a Select Committee. The 21 member Committee under the chairmanship of Shri Bhupender Yadav submitted its report on 22nd July, 2015 in the Parliament recommending various changes.
The cabinet accepted most of the changes in the GST legislation proposed by the Select Committee on 29th July, 2015. Now the 122nd Amendment Bill, along with the changes approved by the Union Cabinet has been placed before Rajya Sabha for its approval where it is required to be passed by the 2/3rd of the members present and voting.
THE ROAD AHEAD
The much awaited Goods and Services Tax (‘GST’) now seems to be a reality as the broad contours are slightly visible but still the bill has a long way to go. If the bill gets passed in the Rajya Sabha, the government will have to again go back to the Lok Sabha for getting the Lower House approval for the proposed changes approved by the Cabinet. Then the bill needs to be passed in atleast50 percent of the state legislatures (i.e. 15 of 29 states) by a way of simple majority. Then it will be sent to the President for his approval.
The general perception is that this Bill itself is a GST Bill, let it be very clearly understood that this is not a GST Bill. In fact, GST Bill is not in sight at all at this point of time. What we have discussed till now is only the Constitutional Amendment Bill enabling or empowering the Union Government and state governments to concurrently levy a tax to be called GST which it cannot levy under the present Constitution.
The point to be noted over here is that a Joint Session of the Parliament cannot be called in the case of a Constitutional Amendment. Also these changes cannot be brought as a money bill because constitutional amendment is necessary for empowering the govt. to facilitate the introduction of Goods and Services Tax (GST) in the country as in the proposed GST model both the Central and State govt. will levy tax on a common base.
Suitable legislation for the levy of GST (Central GST Bill and State GST Bills) drawing powers from the Constitution can be introduced in Parliament or the State Legislatures only after the enactment of the Constitution Amendment Bill and on the recommendation by the Goods and Service Tax Council.
Unlike the Constitutional Amendment, the GST Bills would need to be passed by a simple majority. Obviously, the levy of the tax can commence only after the GST Law has been enacted by the respective legislatures. Also, unlike the State VAT, the date of commencement of this levy would have to be synchronized across the States. This is because the IGST model cannot function unless the Centre and all the States participate simultaneously. Its expected roll out date is 1st April, 2017 (earlier it was 1st April, 2016).
All thanks to the political wrangling, GST has missed several deadlines(be it of 1st April,2010 or 1st April,2016). Now, all the eyes are on the Post Budget Session as The numbers in the Rajya Sabha will somewhat change by the latter half of the Budget session this year favourable for political parties that support the goods and services tax (GST) Bill. This has given government strategists confidence that the tax reform Bill can be passed after April. Government strategists are, therefore, also mulling postponing the GST rollout date from April, 2016 to April, 2017.
A Constitution amendment Bill needs to be passed by two-third majority. Current strength of the Rajya Sabha is 242, with three vacancies. This is an arduous task for the Government given that if all members were to vote, it will need 162 votes in favour. All parties barring the Congress (67 MPs), AIADMK (12 MPs) and Left Parties (10 MPs) support the Bill or are not in outright opposition of the bill. This implies that out of 245 members, 89 belong to the parties opposing the bill finally approved by the Cabinet. Together, these parties make up a little more than one third of the seats in the Rajya Sabha (Approximately 9 surplus seats).
The President nominates 12 MPs, of which currently there are two vacancies and two others,Sh Mani Shankar Aiyar and BhalchandraMungnekar, later opted to be treated as part of the Congress.For the rest 8 nominated persons at present, the government believes most of themwill vote with the Congress, as they were sent to Parliament by the UPA government.
The Bihar chief minister Sh.Nitish Kumar has made it clear that his party supports the GST bill but that the government should get support of the Congress first. His party Janata Dal (United) has 12 MPs. Also there are other parties as well like Samajwadi Party, Shiv sena who can cast votes against the bill, having 15 and 3 members respectively, as they have been in news sometimes in support of the bill and sometimes making statements against it.
Thus it is clear that the Government is nowhere near the required majority.Therefore it becomes necessary for the Government to take Congress on Board or keep waiting for the improving numbers to get the required consent in the Upper House.
As many as 17 MPs will end their terms by April 2016, including five from the nominated category.These are Aiyar, Mungnekar, Javed Akhtar, B Jayashree and Mrinal Miri.
Of the 12 elected MPs set to retire by April, five are from the Congress, three from Communist Party of India (Marxist), two each of the BJP and Shiromani Akali Dal. Government strategists forecast that after these 17 are elected or nominated, numbers of those in support of the GST bill will improve.It is also confident that the AIADMK could be persuaded to stage a walkout at the time of voting.
The only case where the Government will not have to bow down to the demands of the congress is when it is able to convince the AIADMK and LEFT MP’s in the Rajya Sabha to abstain from voting, fill in the 7 seats of nominated category, fill in the other vacant seat. Almost all other parties support them. All such pre conditions seems to be quite a difficult task for the floor managers.
Without taking Congress on the board, the passage of the Bill seems in the dark.But the bigger concern is whether the opposition will allow the Parliament to work even in the Budget Session.
The only bottleneck seems to be in the passage of the bill in the Rajya Sabha. As once it gets passed in Rajya sabha, it has to be approved byatleast 15 states. Looking at the present political situation it is achievable.
BJP presently has standalone governments in the 5 states namely Gujarat, Chattisgarh, Madhya Pradesh, Rajasthan, Haryana.It has coalition government in 7 states, having their own CM in 3 of them namely Goa, Maharashtra and Jharkhand. The other 4 states have CMs from their allied parties (NDA) namely Punjab, Nagaland, Andhra Pradesh and Jammu & Kashmir.
Also the elections are due in the states of Assam, Tamil Nadu, West Bengal and Kerala. So there is only a scope of improvement for the NDA alliance, no scope of losing any territory. Moreover although there is no NDA govt in West Bengal, but the ruling TMC has given its outright support for the GST Bill. Thus we don’t see Government struggling to get it passed in atleast 15 legislatures to make it a reality.
If not in this Budget session, then the Govt will have to wait till next round of rotation getting due somewhere before winter session of 2016 where around 55 more seats will come up for re-election.
Disclaimer: The Rajya Sabha tally as on 7th January,2015 has been taken into account while drafting this article.
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(Source: Compilation from Rajya Sabha website and News Columns.)