Rajya Sabha clears GST bill; AIADMK stages walkout

04 Aug 2016


Rajya Sabha on Wednesday passed the Constitution (122nd amendment) Bill, an enabling legislation for the introduction of the Goods and Services Tax (GST) Bill, ending 10 years of acrimony between India's ruling and opposition parties.

The bill, which would pave way for most important tax reform in post-Independence India, was passed unanimously with all 203 members present backing it in the final voting, with 13 AIADMK members staging a walkout just before the voting.

The Congress and other opposition parties barring the 13 AIADMK MPs who walked out just before the bill was put to vote supported the legislation.

The AIADMK opposed the GST bill describing it as ''anti-constitutional''. ''The Bill violates Article 21 and the basic structure of the Constitution,'' party MP A Navaneethakrishnan said.

He said it violated federal autonomy. He said GST will lead to ''permanent'' revenue loss for the state, adding that party chief J Jayalalithaa had made representations to the Prime Minister with concerns over GST.
Finance minister Arun Jaitley hailed the ''broad consensus'' with various political parties, which enabled passage of the bill, saying it would pave way for one of the most significant tax reforms in India's recent history.
Prime Minister Narendra Modi thanked all political parties for extending their support to the ''truly historic'' piece of legislation and said, ''I would like to add that GST will also be the best example of cooperative federalism. Together, we will take India to new heights of progress.''

''Our MPs must be congratulated on their path-breaking decision to give India an indirect tax system for the 21st century...we continue to work with all parties and states to introduce a system that benefits all Indians and promotes a vibrant and unified national market,'' the PM said in a series of tweets.

If it was finance minister Arun Jaitley who piloted the bill in the House and P Chidambaram from the opposition side who steered the debate on the bill, with Chidambaram at one point terming the bill as ''clumsily drafted.'' This prompted a retort from Jaitley who quoted debates from the drafting of the Constitution.

Chidambaram strongly recommended capping the standard rate of GST at 18 per cent. He said GST is an indirect tax and indirect taxes are ''regressive'' in nature. The trend is to ''keep them as low as possible''. If the centre decided to keep them at a high of 24-25 per cent, then it will defeat the purpose of GST, he said.
Chidambaram also insisted on incorporating the GST rate in the Constitution Amendment Bill so that it can't be levied as per the whims and fancies of the executive.

Finance minister Arun Jaitley in his reply said the guiding principle would be to keep the rates as low as possible, certainly lower than what it is today. ''As we stand today, the political objective is very clear. The rate has to come down, the rate must be reasonable. We will try for the most reasonable rate,'' said Jaitley.

The debate on the bill went on for over seven-and-a-half hours and drew participation from over 40 speakers.

Derek O'Brien of Trinamool Congress said his was the only party that had consistently supported the bill even as he chided the ruling party for its shifting stands on GST.

Sharad Yadav of JD(U) supported the bill on the ground that it would help reduce corruption, as multiplicity of taxes often resulted in graft.

However, calling GST a regressive tax, CPM general secretary Sitaram Yechury asked Jaitley to assure that there would be enough flexibility so that states did not have to come with begging bowls for money. "Without the states, there is no India," he said. Yechury also cited Bhimrao Ambedkar as having said, "If we permit provinces to collect sales tax, a ceiling from the Centre will be a handicap."

Naresh Agrawal of Samajwadi Party said his party was supporting the bill as it did not want to be blamed for being an obstruction to the country's progress. He said the government's intention was "bad" and to raise taxes. "You are saying that we don't want inflation in the country. Then why not set a low rate such as 18 per cent now itself ?" he asked.

All opposition parties praised Chidambaram for articulating his view, while treasury benches credited Modi and Jaitley for the bill.

After the passage of the bill, Jaitley cut a cake in his chamber in the presence of ministers, party MPs and mediapersons.

The bill, first mooted in 2005 during the UPA regime, was introduced in Parliament in December 2014.

The Lok Sabha passed it in May 2015. It was then referred to the Select Committee after being introduced in the Rajya Sabha, where the government lacks a majority.

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