Srinagar: The head of the All Party Consultative Group (APCG), Muzaffar Hussein Beigh, told opposition parties in a meeting held on Thursday that any attempt to bring a new law to implement the Goods and Services Tax (GST) in J&K will become a “huge issue” in India.
Replying to the demand of opposition parties for a separate law to implement GST in Jammu and Kashmir, Beigh 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. Besides, it will also entail amending Section 5 of the J&K Constitution, which can’t be done. More so, any attempt at fiddling with Section 5 will open a Pandora’s Box that will have huge political ramifications for J&K in the future.”
The second meeting of the APCG to evolve a consensus on GST implementation in the state was convened by Beigh. The members of the APCG include former finance minister and NC leader Abdul Rahim Rather, CPI (M) state secretary MY Tarigami, Congress leader Aijaz Ahmad Khan, Hakim Mohammad Yasin of PDF, Nizam-ud-Din Bhat of PDP, Advocate Sunil Sethi of BJP, Ghulam Hassan Mir of DPN, and independent legislators Er Rashid and Pawan Gupta. All of them attended the meeting.
Minister for Law and Justice Abdul Haq, Chief Secretary BB Vyas, Commissioner Secretary Finance Navin K Chaudhary, Commissioner Commercial Taxes, Parvaiz Iqbal Khatib, and other officers of the finance and law departments were also present in the meeting.
Presenting the government’s view, Finance Minister Haseeb Drabu said that the government 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 harmonise 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 harmonisation of our taxation structure with the new tax regime,” Drabu said.
He said GST would be an integrated tax regime that would replace 16 taxes currently being levied by the central and state governments. The taxes to be integrated under GST include Central Excise Duty, Duties of Excise, Additional Duties of Excise, Additional Duties of Customs, Special Additional Duties of Customs, Service Tax, State VAT, Central Sales Tax, Luxury Tax, Entry Tax in lieu Octroi, Entertainment Tax, Taxes of Advertisement, Purchase Tax, Taxes on Lotteries, Betting and Gambling and State Cess.
Drabu said the existing tax incentives under the Industrial Policy will be continued and the cross-LoC trade will be maintained in the current form.
The finance minister said that in the absence of an alternative trading link, J&K is literally integrated with the mainland Indian market. Entire requirements are imported and everything produced or manufactured in J&K is exported to the same market. “Twin taxation systems dissociated from each other will entail costs to business and to the public finance system,” Drabu said. “The trading processes will be subjected to twin taxation systems, making everything costly in J&K, a cost that ultimately the consumer shall have to bear.”