February 2, 2023
Citing Centre

Environment on the GST council had grow to be ‘poisonous’, he stated. (file)


Predicting a grim future for the Goods and Services Tax (GST), Economist and former West Bengal Finance Minister Amit Mitra stated the surroundings on the GST council had grow to be ‘poisonous’. Mr Mitra was talking at a nationwide convention on the success of GST on the West Bengal National University of Juridical Sciences (NUJS) in Kolkata.

Narrating how the functioning of the GST council has modified in 5 years, because the new tax regime got here into existence in 2017, Mr Mitra stated, “There was an issue of taxation for 12 km offshore. Eight states governed by different political parties came together, and I remember Nitin Patel, the then Deputy Chief Minister of Gujarat, he came to me and said, Dr Mitra, you take the lead, and I will support you. He was BJP. Then you had BJP, you had Congress in Karnataka, Tamil Nadu, CPI(M) in Kerala, all political parties governing states along the shore had common interest. I remember Mr Jaitley took a break, we sat together and said sir, we will not let this pass so that your Centre can take over the entire taxation process. What is interesting is that it was a collegial environment, a consensus environment.”

Mr Mitra stated Arun Jaitley, then Finance Minister, agreed and stated he acquired a way of the home. “He told the central government officials flat on their face, withdraw this. This will remain with the states. That atmosphere has gone. Now the environment in the council is majoritarian. It started when I was there. In fact, at times, toxic. And, at times, acrimonious. The saddest part is sometimes conclusions are not reached,” he added.

The GST Council is the one establishment within the nation in the present day which is completely federalist, Mr Mitra additional argued, saying ministers of 31 states and union territories are a part of the council, chaired by the Finance Minister of India. 

“There is no such institution in the country left. What concerns me deeply is the steady erosion of old federalism and consensus making. First three years, it was totally consensus-based cutting across party lines,” Mr Mitra, Financial Advisor to the Government of West Bengal, advised a gathering of regulation college students, legal professionals, and tax practitioners.

Amit Mitra, who’s at present the principal chief advisor to the Bengal Chief Minister, and holds a cupboard minister rank, identified how the GST council just isn’t doing staple items which can be mandated in guidelines of the GST. “Rule 6 says GST Council must meet every quarter. But they didn’t meet. So, I had to write a rather strong letter which came in the public domain and within a few days, I was very grateful that the union finance minister called a meeting. Why didn’t you call the meeting within the first quarter in violation of Rule 6? Who cares? How does it matter in a majoritarian structure?”

He additionally identified the shifting stance of the BJP on GST. “Who opposed GST? In the Vigyan Bhavan, when I was present, nominated by West Bengal Chief Minister Mamata Banerjee to represent West Bengal. A Chief Minister, then of Gujarat, strongly opposed the GST. Interestingly, the Chief Minister became the Prime Minister,” he stated.

“We all came together on one condition. The bureaucrats had proposed compensation to states ‘may’, as lawyers and tax consultants you know what the word ‘may’ can mean, second up to five years. So, we came to a consensus that if the central government is willing to accept ‘shall’ in place of ‘may’ and ‘five years’, all of us here will unanimously agree. Mr Jaitley came and addressed the meeting, and we went forward. So, my point is to show how it worked and how it is working today, which is very, very unfortunate, and it will create stumbling blocks in the future on GST, if majoritarianism becomes the rule,” Amit Mitra stated.

He additionally stated the present GST construction is riddled with fraud. “Mr. Nandan Nilekani made a presentation to the GST Council, and what did he find? He found Rs 70,000 crore of fraud up to 2020. He broke it up into two. One is excess input tax credit fraud, which was around Rs 38,771 crore. How many people conducted this input tax credit fraud, and how did they do it? Create paper companies, create paper transactions, and then ask the government to pay you input tax credit. How many such people were engaged? 42,618 cases. Fraud of Rs 38,771 crore only in input tax credit. Then there was another category. Under declaration. How much was that? Rs 31,247 crore. How many people were involved in under declaration? 97,853 cases. Therefore, the total up to 2020 came to Rs 70,018 crore according to Mr. Nilekani’s official presentation to the GST council. But this is not debated. How do you stop this?” he questioned.

Mr Mitra then cited knowledge on frauds after 2020, supplied by MoS Finance Pankaj Chaudhary within the Rajya Sabha.

“After 2020, we find that fraud totalled another Rs 55,575 crores. How many cases? 22,300 cases. I am giving you exact data. So, what does this total up to. The fraud totals up to 1,25,593 crores. That is combining Mr Nilekani’s figures up to 2020 and then close to the date as per a Rajya Sabha answer,” Mr Mitra stated, including that the figures have been central authorities declarations and if state figures have been taken into consideration, that determine might attain as much as Rs 2 lakh crore. There is, nonetheless, no estimate for that, he added.

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