GST Implementation: Rather Seeks Safeguards For JK’s Constitutional Guarantees

GST Implementation: Rather Seeks Safeguards For JK’s Constitutional Guarantees

28 January 2013
Rising Kashmir


Bhubaneswar,: Finance Minister Abdur Rahim Rather Monday asked Empowered Committee of State Finance Ministers on proposed GST not to ignore constitutionally guaranteed special status of Jammu & Kashmir while finalizing its recommendations. While addressing crucial meeting of Empowered Committee (EC) of Finance Ministers convened in Bhubneshwer, Odhisa today to finalize roadmap for implementation of Goods and Services Tax (GST) regime in India, Rather sought incorporation of suitable provisions in the proposed Article 279-A and Article 279 B to provide safeguards to J&K’s constitutional position. “It was glad to note that committee on GST Design has recognized constitutional position of J&K on this count and have recommended that in clause 4 of Article 279–A, a special scheme for Northern Eastern State and Jammu and Kashmir should be allowed.” He said division of powers between Union of India and J&K State is not at the same footing as it is in respect of other States. “J&K enjoys a special status under the Constitution of India and its constitutional relationship with Union of India is governed by Article 370.” He said the division of legislative powers between the Union of India and the State of Jammu & Kashmir is governed by Article 370 of the Constitution of India, read with Articles 245, 246 and 248 thereof, as applicable to the State. “In its original form, Article 370 of the Constitution did not provide for the application of Part XI of the Constitution, relating to the State Centre relations, including the Seventh Schedule, to the State of Jammu and Kashmir. However, by virtue of the Constitution (Application to Jammu & Kashmir) Order, 1954, as amended from time to time, various provisions of the Constitution of India, including Part XI, were extended to Jammu and Kashmir, with or without modifications. This arrangement empowers the State Legislature with exclusive legislative competence on certain matters, which in case of the other States of the Union, vests with the Parliament. Unlike other States, the residuary powers of legislation also vest in the State Legislature of Jammu & Kashmir. Thus, the powers to be exercised by the Union in relation to the State of Jammu and Kashmir are restricted to the subjects in the Union List and the Concurrent List, as applicable to the State. It is further amplified under section 5 of the Constitution of Jammu and Kashmir in terms whereof the executive and legislative powers of the State extend to all matters except those in respect of which Parliament has power to make laws for the State under the Constitution of India. Further, the proviso to Article 368 of the Constitution of India also lays down that no such amendment to the Constitution of India shall have effect in relation to the State of Jammu and Kashmir, unless applied by the order of the President under clause (1) of Article 370. Accordingly, the executive and legislative powers of the State extend to all matters except those with respect to which Parliament has power to make laws for the State under the provisions of the Constitution of India, as applicable to State of Jammu and Kashmir. Parliament’s power of taxing the sale and purchase of goods or the consignment of goods in respect of J&K State is restricted to the sale, purchase or consignment of goods in the course of Inter-State trade and commerce. The power to impose or levy tax on the sale or purchase of goods within the State or tax on the entry of goods is within the competence of the State Legislature. In the backdrop of the said constitutional position, Entry 92C of the Union List empowering the Parliament to levy taxes on services, inserted by the Constitution (Eighty –Eighth Amendment) Act, 2003 is not applicable to the State of Jammu and Kashmir. Therefore, the power to levy tax on services is still within the exclusive legislative competence of the State Legislature, so far as our State is concerned. It is in this context that the State Legislature extended the ambit of tax on services and a number of services were brought under the provisions of the Jammu & Kashmir General Sales Tax Act, 1962, by amplifying the definition of goods to cover services as well,” he said. “With the implementation of GST regime, the position of J&K would be entirely different as compared to other States of India. All other States would be surrendering exclusive authority to tax goods and, in turn, get the additional authority to tax hither to out of bound ‘service sector’. On the contrary, J&K, being already competent to tax goods as well as services, unlike other States, would not get any additional authority except a share from the central divisible pool,” Rather said. He said before moving forward to firm up Model GST Act and IGST Act, today’s meeting will, besides, recommending implementation of two-Committees, will also bridge all gaps which they have not been able to fill at their level including proposed Dual Integrated Model of GST and CST compensation, which has remained irritant between the States and India. “This will be a step forward to remove mutual trust deficit and will facilitate introduction of GST.” “It is therefore, necessary that before the finalization of its recommendations on the Constitutional (115th Amendment) Bill 2011, the constitutionally guaranteed special status of the Jammu & Kashmir is not ignored by the Empowered Committee of State Finance Ministers,” he added. The EC of the State Finance Ministers was chaired by its Chairman Sushil Kumar Modi, who is also Deputy Chief Minister and Finance Minister of Bihar and attended by the Finance Ministers of different states of the India.