If the GST fails to roll out by September 15, the government will not be able to levy indirect taxes. With GST Constitution Amendment Act, the old tax regimes will cease to be effective on September 16.
The new indirect tax regime – the Goods and Services Tax – is heading for another roadblock. The GST is likely to miss yet another deadline on July 1, when it is supposed to be implemented.
Rolling out the GST on July 1 requires Parliament to pass four Bills before the Budget session ends on April 12.
However, it seems that both Prime Minister Narendra Modi and Finance Minister Arun Jaitley are not very confident about getting all those enabling legislation passed on time despite having a brute majority in the Lok Sabha and the Bills being finance ones.
PM Modi recently told his party MPs to raise awareness among people about the GST while Finance Minister Jaitley yesterday made an impassioned plea in Parliament during his reply on the Budget to pass all the four Bills.
WHY THIS HURRY? A constitutional amendment was done last year to pave way for GST, which will replace all other indirect taxes. A GST Council was set up by the amendment Act. The GST Council has prepared five Bills altogether.
Four Bills are to be passed by Parliament to roll out the GST. The Constitution Amendment Act makes it mandatory to roll out GST on or before September 15. It is not possible without having the legislation in place.
According to the Constitutional Amendment Act, the older taxes will cease to exist on September 15.
If Parliament does not pass the four GST Bills, and government fails to roll out goods and services tax by September 15, it would not be legally entitled to collect any indirect tax from September 16.
No government can afford to be in such a situation even for one day when it does not have the right to collect taxes.
OPTIONS BEFORE MODI-JAITLEY
There are two theoretical options before the Modi government if it fails to roll out GST before September 15.
The government may go to Parliament and seek its nod for the status quo ante â€“ permission to revert to pre-GST situation.
The second option before the government is to adopt the ordinance route or presidential extension. Theoretically speaking, the government is required to prove before both â€“ Parliament and President- that there was a valid and unavoidable reason for not rolling out the GST.
THE GST BILLS
The government is likely to introduce the GST Bills next week. The Bills are – the Central Goods and Services Tax Bill 2017 (C-GST), the Integrated Goods and Services Tax Bill 2017 (I-GST), the Union Territory Goods and Services Tax Bill 2017 (UT-GST) and the Goods and Services Tax (Compensation to the States) Bill 2017.
The Union Cabinet cleared all the four Bills earlier this week for tabling in Parliament.
The State Goods and Services Tax Bill 2017 needs to be separately passed by 29 Assemblies to have the new tax regime in the country.