WITH GST CONSTITUTIONAL AMENDMENTS, WHAT NEXT ?

[Dr. Sanjiv Agarwal]

The GST Bill – The Constitution (One Hundred and Twenty-second Amendment) Bill, 2014 has been discussed and passed by Rajya Sabha on 3^rd August, 2016 after a 7 hours long debate by members of Rajya Sabha. The discussion on the GST bill came after months of discussions between the ruling party and the opposition – with both sides meeting multiple times to negotiate amendments.

The momentous Bill, which marks the first parliamentary step towards implementation of a “one country, one market, one tax” framework, was cleared by a two-thirds majority, which is required for any Constitution Amendment Bill, following a division of votes.

In the process of renewed Parliamentary approvals, opposition had sought from the Government certain assurances and the amendments are in relation to the following:

• The actual GST Bill should take care of concerns about state Government's being allowed to raise revenue in emergency situations.
• The subsequent GST Bill should not be categorized as Money Bill, by passing Rajya Sabha.
• Cap on GST rates of 18%
• Improved dispute resolution mechanism
• Compensation to states for revenue ('may' replaced by 'shall') loss for 5 years on account of introduction of GST
• 1 percent additional inter-state tax withdrawn
• Dispute resolution forum to adjudicate disputes between

• Centre and states
• Two or more states
• Centre + states and other states

• Taxes collected by Union shall be distributed between Union and States

The lower house (Rajya Sabha) too approved the revised Bill on 8 August, 2016 after changes were approved by Rajya Sabha.

The Bill has been passed unanimously and the journey to GST from now onwards will inter alia, involve the following steps –

• At least half the state assemblies, that is 15, would need to ratify the Bill by two-thirds majority.
• It will then go for presidential assent before being notified in the gazette
• After all these legal procedures, Parliament would take up the actual CGST and IGST Bills (possibly in the winter session).
• Passage of SGST law by State Legislative Assemblies
• Formulation of GST rules by Union and States and notification thereof
• GSTN Network including testing
• Training and awareness

The Bill has since been ratified by the Legislative Assemblies of Assam (12.08.2016), Bihar (13.08.2016), Jharkhand (17.08.2016), Himachal Pradesh (22.08.2016), Chhattisgarh (22.08.2016) and Gujarat (23.08.2016) and ratification by Delhi, Madhya Pradesh, Haryana, Goa, Maharashtra, Rajasthan etc are likely to follow suit.

GST : Immediate Challenges ahead

• Ratification by states
• Rate of GST
• Exemptions / Negative list
• Threshold limits
• Finalization of GST laws
• Composition limit
• Dual control by state / centre

The ratification by States is not a major issue and will happen but the real challenge lies in deciding the issues on which there are differences between the Union and States. These issues are crucial to success of GST. Moreover, lot of fine-tuning is required in the provisions of model law in respect of compounding, thresholds, aggregate turnover, supply, place of supply, valuation, input tax credit etc.