In order to discharge their given responsibilities under the Constitution, both the Union and the States must have adequate financial resources. This is a significant indicator for any system of federation to become successful. Our constitution has made elaborate provisions in this regard taking a cue from the Govt. of India Act, 1935. These provisions relate to the distribution of the taxes as well as nontax revenues and the power of borrowing, supplemented by provisions for grants-in-aid by the Union to the States. A complicated arrangement for the distribution of the financial resources of the country has been set up in order to provide an equitable distribution of the financial resources between the two units of the federation, instead of dividing the resources into two watertight compartments, as under the usual federal system. As far as federalism is concerned as we see constituent assembly debate as we know that we decided to continuing with the Government of India Act 1935 is to having an unitary government. Almost 85 per cent of the constitution was from the Government of India Act 1935. Our Constitution is too centric and take to reduce virtually nothing and the lovely speech by the Dr BR Ambedkar, He said that this criticism was fallacious and it is without substance and he add that the principal in which our federalism rests is the partition of legislative and executive power between the centre and state. There is central power and executive power flows from the constitution.
The Goods and Services Tax (GST) is the most significant reform since liberalisation commenced in 1991, and envisages, ” a one Economic India” which is expected to lead to a more efficient and productive economy. It might lead to several macroeconomic gains also. The passing of the Hundred and One Constitutional Amendment Act, 2016 which has paved the way for GST regime in India, has been a spectacular example of parliamentary democracy in India. Ruling or opposition, both political parties have contributed to it. GST council is also a good example of mutual cooperation among Centre and States irrespective of party affiliations. Till now, it does not appear that with the advent of GST Act in India, the concept of cooperative federalism has been dented even to a minimum. Hopefully, it will be implemented in the same spirit. Moreover, GST roll out could be a template for the future of cooperative federalism. It can also serve as a template for reforming other such institutions of cooperative federalism, starting with the interstate council. Like political integration, the GST regime may well prove to be a harbinger of “One Economic Nation” that is a cherished goal of our Country.
GST is terrible for federalism it has bad impact on federalism. In our country there is not one GST there is 29 GST in the country because every state has its own GST which is called SGST and Article 258A of the constitution says that the Parliament and every state has exclusive power to levy GST. The Only limitation is that the state cannot levy interstate GST that we have 29 GST. It means we have Bengal GST, Tamil Nadu GST and so on. If there are 29 GST What happen if they are not in sink. Today the danger is if any state does not follow the GST then nothing we can do about it. The first objection is there is 29 GST this is ridiculous. We can understand Brazil has dual GST but 29 GST which looks like hydra like situation. The multiple rates of taxes and the basic feature of GST is one tax there is 0% rate for essential commodities, 2% for jewellery, then there is 8% for something, 40% for expensive clothes. This multiple rate list is disaster making or disaster waiting to happen. Then do not call it GST. The biggest danger in India is stumbling block to make in India in which the manner of taxes administered. Unique feature strike me this is surprisingly no legislative entry for the GST. It need to be put in the concurrent list but there is no entry for the schedule 7 it only traces to Art. 246A only. Hereafter there is no sales tax, service tax and GST legal name tax on supply on goods and services that’s the meaning. Take an example before GST Tata Motors make a truck and sell it. I t need to pay only excise duty and also pay sales tax on the truck. The cardinal feature of the tax is subject matter of tax and the measure of tax. In other word manufacturing is the subject matter of tax and selling price is the measure of tax. GST theoretical sounds good but the reality is the complete different in future we all are going to feel that all across the country we have to be forced to be in GST and forced to operate the computer with the system where power is uncertain. This is going to be backlash because lots of people are not ready.
As we all know we cannot go back to the GST as the Parliament passed the Act as a citizen of India or the opposition was also move forward to the resolution but GST should not be completely distributed all the sectors. Took an example service tax that were not started fortnight it was gradual process from 4 sectors to 12 then 100 and goes on.
I would suggest take three manufacturing sector, three trading sector, and then implement GST on them and try to find out the difficulties we are going to faced and then implement GST and if it was rolled out in one go then the country was simply not able to take the shock or completely migrating from one platform to the other.
Central University of South Bihar