BJP blocks GST because of Gujarat minister (Amit Shah): PM

“The reasons that have been given,frankly,I cannot mention it in public. They say because you have taken some decision against a particular person,who was a minister in Gujarat (Amit Shah),we must reverse it.” Singh,however,stopped short of naming the minister.

Amit Shah was a minister in the Narendra Modi-led Gujarat (reputedly Modi’s right hand man) government before he was arrested for his alleged role in the killing of Sohrabuddin Sheikh.

In fact,it was Yashwant Sinha,as finance minister during the BJP-led National Democratic Alliance government in 2000,who kick-started indirect tax reforms and initiated a dialogue on value-added tax by setting up the empowered committee of state finance ministers. Finally,VAT was implemented in 2005 and P Chidambaram,as finance minister in 2007-08 took the next step of announcing a transition to a single GST.

But the BJP-ruled states have stalled introduction of GST over the last couple of years. “When the Parliament is not allowed to function,when the Opposition do not wish to cooperate with the path-breaking reforms of Goods and Services Tax (GST)… This is a reform which is needed,” Singh said at the interaction with TV editors.

“The comment from the Prime Minister that the BJP was acting in revenge against action against a Gujarat Minister is laughable. It is unfortunate,” BJP president Nitin Gadkari said at a press conference later in the day. “We (BJP) support GST. But some (BJP ruled) states assess they would be at loss (under the GST). In fact,states of Madhya Pradesh and Gujarat had presented me a data regarding the revenue loss to them (under proposed GST),” he said.

The PM’s comments come just days after BJP-ruled states opposed the latest draft on Constitutional amendment required for introducing GST. This was the Centre’s third attempt to appease concerns of states on issues like fiscal autonomy and dispute settlement. At the meeting with the Empowered Committee of state finance ministers,Finance Minister Pranab Mukherjee sought their support for tabling the amendment in Parliament.

The Constitution Amendment Bill has to be passed by a two-third majority in both houses of Parliament and ratified by at least 15 state Assemblies.

GST was scheduled to be rolled out from April 1,2010 but its introduction was postponed by a year after the Centre and states failed to reach a consensus on crucial matters like model of GST,its rates,fiscal autonomy to states and compensation. The Congress-led UPA government is now keen to introduce the proposed tax,which will subsume indirect levies of the state and Centre,by April 2012. For this to happen,the necessary legislation needs to be introduced in Parliament in the upcoming Budget session.

Although it is largely the BJP-ruled states who have raised objections,other states that are ruled by Congress or its key allies such as Tamil Nadu,Maharashtra,Haryana,Kerala and Andhra Pradesh,too,have expressed concerns on issues like fiscal autonomy,rates of the tax,its compensation or subsumation of state levies like octroi.