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Review or repeal? SC’s GST ruling sparks debate on stand within Cong

A section of the Congress leaders believe that the party should have demanded a review of the GST mechanism or repeal of the GST Act in its Udaipur chintan shivir declaration and that it lost an opportunity by not doing so.

Written by Manoj C G | New Delhi |
Updated: May 21, 2022 9:25:55 am
(Clockwise) P Chidambaram, Anand Sharma, Manish Tewari, Mani Shankar Aiyar and AICC Data Analytics head Praveen Chakravarty.

The Supreme Court ruling that the Goods and Services Tax Council’s recommendations are not binding and that states can “resist the mandates of the Union by using different forms of political contestation” has rekindled a debate within the Congress on seeking a review of the GST mechanism — or even demanding the repeal of the Act itself.

A section of the Congress leaders believe that the party should have demanded a review of the GST mechanism or repeal of the GST Act in its Udaipur chintan shivir declaration and that it lost an opportunity by not doing so.

Sources in the Congress said some senior leaders, including former Union Ministers Anand Sharma, Manish Tewari and Mani Shankar Aiyar, besides AICC Data Analytics head Praveen Chakravarty, had raised these views during the extensive deliberations of the P Chidambaram-led group on economic affairs during the conclave.

Chidambaram, the sources, was not in favour. When contacted, Chidambaram said no such demands were made in his presence. He did not elaborate.

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The Supreme Court ruled on Thursday that recommendations of the Goods and Services Tax (GST) Council only have persuasive value. While the Centre has said that the decision does not bring any change to the already existing framework, some Opposition-ruled states have stated that it would give them greater space to take decisions in the federal structure.

The Congress’s declaration, issued at the end of the shivir, said “a high-handed and arbitrary GST brought small and medium industries to the brink of disaster”. Talking about the “sharp deterioration of the Centre-State fiscal relations”, it said “the Indian National Congress is of the view that it is the need of the hour for a comprehensive review of Centre-State fiscal relations and to protect and preserve the rights of the states”.

During the discussions, Chakravarty is learnt to have forcefully argued that state governments have lost their independent taxation powers after the introduction of GST and that the promised economic gains have remained elusive. Sources said he argued that the party should demand the repeal of the GST Act.

Tewari, too, strongly argued on similar lines. He is learnt to have said that the GST has “bartered away” the rights of states. Moreover, the Union government has repeatedly reneged on its GST commitments. In that light, he is learnt to have argued that the time has come to review whether the GST itself should be repealed.

He felt such a view must be incorporated in the declaration.

Sharma said the GST mechanism should be reviewed.

Sources said Chidambaram felt a repeal was too radical an idea which needed to be discussed and considered at a different level in the party as it was outside the mandate of the group.

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Meanwhile, Chakravarty tweeted Friday that the Supreme Court has “affirmed what I’ve argued for years about GST as a flawed idea for India’s federalism”.

When contacted, Tewari declined to comment on internal deliberations in the party but said “the Supreme Court judgment had reaffirmed apprehensions about the efficacy of the GST mechanism as the magic bullet to India’s economic problems”.

When contacted, Sharma told The Indian Express that the “GST needs a review”.

“In a federal country, the rights of the states have to be protected…The way it was implemented in a very hasty manner…it is flawed…I welcome the judgment. It is a landmark judgment. It is very reassuring for the states because the Centre-state relations and the federal spirit has been under stress. And the states have been at the receiving end. The time has come for a comprehensive review to ensure that the states… sovereignty of the legislatures as well as their rights are fully protected,” he said.

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