TIOL-DDT 2657
06 08 2015
Thursday

NORMALLY it is inside Parliament that legislative Bills are debated, decided and made into laws. But for the last few days Parliament is not functioning as it should.

Recently the Finance Minister Arun Jaitley has used his Facebook page for explaining his position on GST - Dissent or Disruption - The Congress Party's Position on GST (DDT 2654 03.08.2015).

Congress party's Mani Shankar Aiyar blogged his reaction to the FM. Excerpts from his blog:

How Congress Will Block GST

"ARUN Jaitley's Facebook post on Congress and the GST is wrong on every count. He begins by bemoaning the fact that while the GST (Goods and Services Tax) is a Congress initiative, it is now the Congress that is blocking progress. What he forgets to add is that it is the BJP, led in this instance by none other than Jaitley himself, who blocked the passage of the 2011 GST Bill presented by then Finance Minister, Pranab Mukherjee, principally because Gujarat, under a Chief Minister called Narendra Modi, was dead opposed to it. It is thus richly ironic that the man who taught us how to block matters is now bemoaning how well we have learned from him to do so.

Our Note of Dissent begins by saying that while we are in favour of a "simple and comprehensive GST" the present Bill is neither simple nor comprehensive. It is not "simple" because it is pitted with so many exceptions, exemptions and compromises as to obscure the overarching purpose for which the Congress has been campaigning for a GST for more than a decade, namely, to jack up our growth rate by making India a single common market where, whether a product is sold in Bulandshahar or Basavangudi, the sales tax levied on it is the same everywhere. This can only happen if every good and every service, without exception, comes within the ambit of the Bill. Hence our emphasis on the next two words: "and comprehensive". If electricity and most petroleum products are kept out of the Bill's purview, as Jaitley has proposed, obviously a huge input in the production of every type of good and service will be excluded. It is impossible to think of almost any product (except perhaps handlooms and handicrafts) that do not require electricity and petroleum products. Yet, Jaitley's Bill does just that.

Secondly, alcohol for human consumption is one of the most revenue-generating items produced. Yet, the liquor industry is riddled with malpractices because high taxes on liquor only open the door to 'hooch' and what is technically called 'seconds' - liquor that is siphoned out of sight of the taxwallah and sold in the black market. This has not only spelt a painful, writhing death for thousands caught in the web of illicit liquor, it has also spawned a vast mafia involved in all kinds of criminal activity. Therefore, including liquor and tobacco in the GST is an imperative of rendering the GST "comprehensive". Jaitley's Bill fails on that score.

Next, Jaitley admits that the Congress proposal to provide for an 18 per cent ceiling on GST has merit. Yet, he wants to leave it to the GST Council - a collection of State Finance Ministers - to decide the rate. As the rate being bruited about (on a calculation made by the National Institute of Public Finance and Policy) is 27 per cent or even higher, there is naturally concern that in chasing higher revenues - which is arguably the chief concern of Finance Ministers - the temptation will be to take the GST as high as possible. That is why a Constitutional mandate to keep the rate moderate and reasonable was being attempted through the Congress amendment to provide a ceiling of 18 per cent beyond which the GST Council would not be authorized to go.

Note that any indirect tax, including GST, is "regressive" - that is, it falls most on the poorest consumer. With direct taxes in the region of 30-33 per cent, an indirect tax like GST at 27 percent would be a huge burden for the poor to bear, the burden being the greater the poorer the consumer.

Jaitley's colleagues in the Select Committee took recourse to the argument that a specific figure or percentage cannot be mentioned in the Constitution. We patiently pointed them to the precedent that the Constitution in Article 276 (2) sets a ceiling in absolute numbers - "two thousand and five hundred rupees per annum" - on professional taxes; so there was no problem in mentioning a specific percentage as the ceiling for GST. The argument did not wash with the BJP. We then pointed out that they themselves, in this very Bill, were proposing an additional levy of 1 per cent. If it was valid, we said, to propose a specific percentage in one part of the Bill, how was it illegitimate to propose a specific percentage in another part of the same Bill? Answer there was none because in the smug arrogance of its majority in the Lok Sabha, the BJP has closed its ears to straightforward logic.

With regard to the BJP proposal to levy an additional 1 per cent tax for two years, we pointed out that this would be market-distorting besides being wholly unnecessary if our proposal were accepted that for a period not less than five years, the Centre should fully compensate any revenue loss suffered by any state. But Jaitley's boys (and now, it would seem, Jaitley himself) were having no truck with any Congress amendment. Well, we will have to teach the Jaitley gang that in our parliamentary system a simple majority in the Lok Sabha is not enough to bulldoze their view; our strength in the RajyaSabha exceeds theirs and they have to secure a two-thirds majority in each House, with half the members present and voting, to secure passage of a Constitution amendment Bill such as the 2015 GST Constitution amendment Bill. Congress members of the Select Committee constituted one-seventh of the strength of the Committee; our strength is nearly double that in the RajyaSabha. With the help of just those three other parties (CPI-M, CPI and AIADMK) who submitted Notes of Dissent, we will have the required blocking one-third of the vote. Jaitley needs to redo his arithmetic.

The 2011 Mukherjee Bill that Jaitley, a new convert, has suddenly started quoting when it suits his convenience, provided that there would be a GST Disputes Settlement Authority. Jaitley's merry band have decided that the GST Council will itself settle all disputes - which is a blatant transgression of the elementary judicial principle that a party to a dispute cannot be a judge in its own cause.

And, finally Jaitley's insensitivity to the interests of local government, whose "sound finances" - a Constitutional requirement - are in danger of being seriously undermined by the Bill, is part of the same mindset. We asked for no more than that the "principle" of local bodies receiving an equitable share in any revenue buoyancy be discussed in the GST Council. This was rejected. Jaitley points to the State Finance Commissions as the appropriate forum for such discussion, but flinches from accepting that unlike central Finance Commission recommendations that, by convention, are accepted and acted upon, most State Finance Commission recommendations are gathering dust in mouldy cupboards. Inclusion of this point in the GST Constitution amendment would strengthen not weaken the 73rd amendment which assures the "sound finances" of the Panchayats.

We are not in a mood to oblige Jaitley. He can eat his heart out."

Arun Jaitley replies:

Hooch versus alcohol - Congress party's priority

In response to my blog ‘Dissent or Disruption - The Congress Party's Position on GST', I have received a response through a blog "How Congress will block GST" written by my friend Mani Shankar Aiyar. Since he was the leading dissenter on behalf of his party, I have no reason to doubt that he represents the views of the Indian National Congress. Vide this blog, he gives an interesting reasoning for blocking the GST. He claims that alcohol for human consumption is taxed at a very high rate by the State governments. He argues to avoid costly alcohol people resort to ‘hooch'. This results in revenue loss, malpractices and has even led to death of many people caught in the web of illicit liquor. He, therefore, believes that liquor should be brought within the GST instead of leaving it to the taxing purview of the States so that it can be taxed at the constitutional limit of 18% that the Congress party now proposes. Obviously, the UPA's two eminent Finance Ministers were not struck by the wisdom that Mani Shankar Aiyar possesses. If Mani's blog is to be believed, Congress party's position is to make alcohol cheaper so that people do not resort to ‘hooch'. Is this Congress Party's concept of a comprehensive GST that alcohol becomes cheaper? Is this amongst the basis for Congress Party's opposition to the GST?

I hope the Congress party either clarifies its position or confirms Mani's view .

The Conclusion: We can be sure that there will be no GST on 1st April 2016 All the GSTseminarists, commentators, experts and babus-in-the-wings ready waiting to take positions can relax.

Coming from Moon - Customs Clearance Mandatory

ON July 24 1969, Neil Armstrong, Edwin Aldrin and Michael Collins returned after a trip to the moon, Armstrong being the first man ever to step foot on the moon.

On arrival they had to file a Customs Declaration.

They declared that the owner of their aircraft was the National Aeronautics and Space Administration, popularly known as NASA; the Flight No. was Apollo-11; they had departed from MOON and landed at Honolulu, Hawaii, USA.

They declared that they took off from Cape Kennedy and it was a direct flight to Moon with no en-route stops. They declared the three of them as crew members and further declared that there were no passengers who boarded the flight from Moon or who disembarked at Honolulu.

They had to declare the cargo they brought with them. They declared them as Moon Rock and Moon Dust samples (obviously not in commercial quantities).

They declared that there were no persons on board known to be suffering from illness other than airsickness or the effects of accidents.

Regarding any other condition on board which may lead to spread of disease, they were not sure and declared, "TO BE DETERMINED".

The Honolulu Airport Customs Inspector signed and "ENTERED" them. By this signing act, he managed to etch his name in the history books!

Edwin Aldrin claimed a travel expense of 33.31 dollars for the whole trip - which was approved without any cuts.

P.S: Actually they did not land in Honolulu - they plunged into the ocean from where they were picked up. Sometime back there was an accident where an Air India flight ran past the runway and stopped in a ditch. One of the passengers who survived got out, walked on to the road and sought the help of a motorcyclist to drop him at the airport. He walked into the airport from the wrong side and requested the immigration officer to stamp his passport.

Aadhaar Number in Employees' Service Books

DoPT had requested all Ministries/Departments to ensure that the service books of all employees have an entry of the employees' Aadhaar number and sought compliance report. The information from most of the Ministries/Departments has not yet been received by this Department so far.

DoPT again requests all Ministries/Departments of the Government of India to intimate the action taken in this regard and also furnish consolidated information in respect of the Ministry/Department as a whole, including attached and subordinate offices, latest by 14th August, 2015.

What will they do if an employee does not have Aadhaar. It is not mandatory that all government employees should have aadhaar card.

Recently the former Solicitor General Gopal Subramaniam argued a contempt petition filed against the Central Government and various agencies for insisting on Aadhaar card. The government told the Supreme Court that as per apex court's earlier orders, the Centre has conveyed to the states and authorities concerned not to make Aadhaar cards, issued by Unique Identification Authority of India, mandatory for availing various schemes; persons, having Aadhaar cards, were being asked to provide it to authorities but this was optional.

Even the new Income Tax Return Forms require the assessee to furnish his aadhaar number, if he has one.

DoPT No. Z-20025/9/2014-Estt.(Allowance)., Dated August 05 2015

Until Tomorrow with more DDT

Have a nice day.

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