GST rollout headed for another delay

The Centre faces the prospect of missing the April 2012 deadline to roll out goods and service tax (GST) with Bihar deputy chief minister Sushil Kumar Modi on Tuesday formally turning down the offer to head the empowered committee of state finance ministers. The Bihar deputy CM conveyed his decision to finance minister Pranab Mukherjee when the Congress leader called to talk a reluctant Modi into taking up the challenging assignment. Modi is learnt to have cited his preoccupation with governance in Bihar to decline the offer. Sources, however, indicated that his no was driven by the opposition to GST from BJP-ruled Gujarat and MP and the escalating Opposition-government tensions. Prime Minister Manmohan Singh’s jibe some time ago at the BJP that it was opposing GST after the arrest of former Gujarat home minister Amit Shah has stiffened the resistance. Although Amit Mitra, the newly-appointed West Bengal finance minister, is emerging as a compromise candidate, without the support of BJP the biggest tax reform move cannot be implemented. BJP is in power in seven states and it is an ally in Bihar and Punjab. Sushil Modi apart, the other roadblock to rolling out GST is that the reform requiring a constitutional amendment has to be cleared by the parliamentary standing committee on finance headed by BJP leader Yashwant Sinha. Finance ministry officials said the status of the Bill was not known, while sources said panel would like to discuss the issue with the states for which the former finance minister has not sought the Lok Sabha Speaker’s permission. The government has already missed the deadline for rolling out GST once as the new regime was to be in place from this April. Though Pranab Mukherjee on Wednesday rolled out the countours of the infrastructure for collecting GST, during a private meeting with institutional investors a day before he admitted that he was facing resistance from states. During a meeting with senior customs and excise department officials FM said a pilot project would be unveiled next month in 11 states and government is committed to go ahead with launch of required infrastructure for the indirect tax reforms.