Punjab FM tells Nirmala Sitharaman GST meet agenda is 'mundane' & Covid goods taxes high

Ahead of the GST Council meeting, Congress leader and Punjab Finance Minister Manpreet Badal has written to Union Finance Minister Nirmala Sitharaman raising several concerns and seeking timely and comprehensive action on the GST. In his five-page letter to Nirmala Sitharaman, he said even though the GST Council is meeting after eight months, the agenda for it is "mundane'' and does not deal with substantive issues that have been raised in the past. The Goods and Services Tax (GST) Council meeting is scheduled for May 28.

Punjab Finance Minister writes to Nirmala Sitharaman

Manpreet Badal also said that bureaucratic decisions are setting dangerous precedents of subverting the process of law and stressed that the GST Council is a sum total of the Central and State legislatures for the purpose of GST and cannot be short-circuited in important decisions. The Punjab Finance Minister in his letter also highlighted that life-saving items for COVID-19 have basic custom duties of up to 20 per cent and a GST of up to 18 per cent and said they need to be tax-free.

"In view of the prevailing position the country finds itself in today, we need to take some urgent measures on the pandemic front. It is baffling that despite the crisis our country currently finds itself in, with millions of people suffering consequences of COVID and inadequate health infrastructure, taxes this high continue to apply on basic essentials needed to overcome this life-threatening disease," Badal said.  

Raising the issue of the GST Implementation Committee is bypassing and subverting state laws, Badal said that no meaningful prior consultation is held with states while the dispute resolution mechanism is totally missing in the GST. He also raised the issue of extending the validity of certain exemption notifications, enactment of new restrictions on availing of tax credits by amending Rule 36 and insertion of rule 86B (payment of minimum tax in cash even while the tax credit is available in certain cases) and cancellation and suspension of registration on additional grounds by amendment of Rules 21 and 21A.

Highlighting the issue of restrictions on the validity of the E-way Bill,  the Punjab Finance Minister said that amendment in various rules placing the additional burden of compliance on tax-payers, extending compliance burden of e-invoicing on mid-sized entities with turnover between Rs 100-500 crore and waiver of penalties in certain situations.

"Most of these decisions require an amendment to rules that would also require placing them before State legislatures. I fear that substantive benefits cannot be withdrawn or restrained by subordinate law and some of them may have ideally warranted a process of enactment of the law," read the latter.

The Punjab Finance Minister, who is a member of the GST Council said that the GST is being increasingly perceived to be causing "excessive harassment and arbitrariness (eg freezing of productive assets of business, suspension of registrations, and denial of eligible tax credits) and moving away from a fair and non-adversarial tax system" that forms the foundation for a progressive tax.

"It would have been desirable to hold a discussion within GSTC about striking the right balance between the needs of facilitation and enforcement before going for these changes. To guard against such abuse we should define and notify formally powers of the GIC," Manpreet Badal added.

Congress leader Jairam Ramesh also said, "My colleague MS Badal has raised critical concerns in his letter to FM Nirmala Sitharaman...Will Madam FM listen to voices of reason?". Noting that he has always hoped that GST will provide the foundation for a strong and vibrant India, the Minister said that while Punjab has even gone ahead with grave risks to its revenue agreeing to subsume Tax in GST. 

(Image: PTI, Twitter- @MSBadal)