One India, one tax: GST bill passed unanimously by Rajya Sabha

The Rajya Sabha on Wednesday passed the Constitution (122nd amendment) Bill, 2014, an enabling provision to bring in three other GST bills and thus weave India into one economic unit, with full majority present in the house. AIADMK was the only party that abstained from voting in protest, calling the bill an attack on federal structure as Tamil Nadu stands to lose substantial revenue through GST.

Moving the bill for passage, finance minister Arun Jaitley said, "It will make the system more efficient and compliant by making evasion of tax difficult… and there will be no cascading effect of taxes like tax on tax, and in the final analysis will bring the rates down."

Incidentally, PM Modi was absent during the debate leading to historic passage of the bill touted as the biggest economic reform of independent India.

Finance minister Arun Jaitley successfully wriggled out of opposition's demand to declare categorically that the three GST bills – the Central GST, the inter-state GST and state GST – will not be money bills. The opposition led by Congress leaders P Chidambaram, Jairam Ramesh, Kapil Sibal and Ghulam Nabi Azad tried hard to bargain, asking Jaitley to give a solemn assurance that the subsequent GST bills will be finance bills as it is going to be the biggest Constitutional amendment affecting the whole country and where states are the major stake holders.

When Jaitley replied how he can assure when the bills have not been drafted yet, Chidambaram argued, "There is nothing in the Constitution that obliges him to bring it as a money bill…In the interest of the country, please bring it as a financial bill."

Amid hectic discussions in Congress benches, Jairam said, "There is no guarantee that he will declare it as money bills in November session."

"When every member from opposition has demanded GST to be finance bills, why the finance minister is dilly dallying. If he does not take the house into confidence it means he has intentions to bring it as money bill," said Sibal.

However, the maximum Jaitley could oblige was, "We will fully comply with the Constitution and we will discuss the bill in the house."

Looking visibly disturbed, the Congress benches finally had to fall in line to vote in favour in the bill.

Jaitley also did not assure the Congress to keep the cap on GST rate at 18% but said that they would try keep at the minimum as otherwise it may add to inflation. However, the BJP government agreed to do away with 1% additional tax, a demand made by Congress to avoid multiplicity of taxes that it argued could lead to cascading, multiplicity of taxes.

The Congress, however, used the debate as an opportunity to grill BJP and in particular, Prime Minister Modi, for opposing the GST amendment bill for three continuous years by calling it "anti-nation" and "anti-federal" structure of the constitution.

"The blame game you have recently launched against us that we are against GST and thus anti-national is in bad taste. It is important to remind you and the country, how desperately we tried to make a consensus on GST with you but failed. Your opposition was political, not ideological. The main opposition to our GST was launched by the then Gujarat chief minister Narendra Modi. But when CM Modi became PM Modi, his thoughts on GST changed. I really wish the PM, who now is saying that those who are opposing the bill are committing suicide, bill should have been here," said Anand Sharma of Congress.

In his reply, Jaitley said that the 2011 bill brought by Congress had several shortcomings including compensation to the states, that led to its opposition.

Replying to the debate in which MPs from major manufacturing states of Maharashtra, Tamil Nadu, Karnataka and Gujarat allayed apprehensions that GST will cut into their revenue share and consumer states will benefit, Jaitley said provision of compensation for five years has been kept to tide over this problem.