With the historic inauguration of the goods and services tax (GST) just hours away, party politics threatened to detract from its lustre but industry hastened to comply with the new tax. Citing protests by small and medium-scale entrepreneurs, traders, weavers and informal-sector workers, the Congress, Trinamool Congress and Left parties said they will not attend the midnight (June 30-July 1) function in Parliament that the ruling dispensation wants to be a gala, inclusive affair, even as finance minister Arun Jaitley reminded them that the GST Council had taken all decisions through broad political consensus. Of the 81 lakh existing excise, service tax and VAT assessees, 68 lakh have already been issued provisional IDs by GSTN, the IT backbone for the new system, and 10 lakh of these have got provisional registration certificates as well.
As many as 1.6 lakh businesses hitherto not assessed for any indirect tax have enrolled for GST since June 25, the day the GSTN portal reopened for registration. Meanwhile, the GST Council which will meet here at 7 pm on Friday for two hours may restrict it to a celebratory occasion, but there is immense pressure on it to consider some pending issues over e-way Bills and the practical difficulty in recovering the differential between the current tax and GST from fertiliser stocks lying with manufacturers and dealers as MRPs are printed on them.
Although the council had decided to defer the enforcement of e-way bills to a future date, the industry is still worried over the prospect which it sees as potentially cumbersome. The relevant rule requires a business to generate such bills for goods worth more than Rs 50,000 in real time from GSTN and carry them along with invoices when the goods are being moved around. It is also likely that the GST Council might decide to include natural gas in the GST system, given the fact that the companies that need to pay the tax are large ones which don’t have a problem in complying quickly.
The technical argument in favour of including natural gas is that it will reduce cascading of taxes in the petrochemical value chain (downstream industries ranging from synthetic textiles to polymers and sundry plastics producers will benefit). Also, the state governments won’t have a problem here because states hardly earn any revenue from gas (which is under central excise, not state VAT) now. Though products namely liquefied petroleum gas and naphtha are under the purview of GST, diesel, petrol, crude oil, aviation fuel and natural gas have been kept outside it.
The fertiliser firms had petitioned the council over the prospect of being saddled with accumulated input tax credit. Since these companies sell their products at lower (MRP) prices while the government gives them subsidies, their output tax liability could be much lower than the available input credit. After the council meet the action will shift to the historic central hall of Parliament. The invitees to the event include President Pranab Mukherjee, vice-president Hamid Ansari, Prime Minister Narendra Modi, Lok Sabha Speaker Sumitra Mahajan and former prime ministers Manmohan Singh and HD Deve Gowda.
The function will likely last an hour, where the president and prime minister will speak on the subject. This will be accompanied by screening of two short films on the subject of GST. All the members of Parliament and state finance ministers who are members of the GST Council will likely be present at the event. The Congress’ decision not to attend the midnight session came after party president Sonia Gandhi met former PM Manmohan Singh along with other leaders here on Thursday.
The party, which sees the GST as its brainchild, is peeved at the current government hogging the limelight for the epochal reform while it is also critical of the “hasty” implementation of GST without allegedly giving due consideration to all aspects. “The Left will not be participating in the midnight GST meeting. People are agitating across the county. There are serious apprehensions in the minds of people over GST’s implementation. We cannot be celebrating when people are agitating,” CPI’s D Raja said.