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What Next?- If government would miss Sept. 2017 deadline for GST roll-out?

March 17, 2017[2017] 78 taxmann.com 127 (Article)
848 Views

MONARCH BHATT

Advocate

Introduction

1. The constitution of India has been amended by 101st Constitutional Amendment Act, 2016 on 9th day of September, 2016 and GST council was appointed on 12th September, 2016 to decide key factors for introduction of GST. One of the thorny issues of adjudication of assesses has been sorted out by the GST council on 16th January, 2017 which was their last meeting before Union Budget 2017. The issue was discussed in almost five to six meetings of GST councils held on various dates. There are several such issues pending before the GST council for discussion and considering it, the date for roll out of GST has been once again postponed from 1st April, 2017 to 1st July, 2017. In these circumstances, if the Government is not able to meet their deadline for introduction of GST which is 1st July, 2017, thereafter the last opportunity available with them for introduction of GST is 16th September, 2017. (The date has been calculated considering the provisions of General Clauses Act).If government fails to meet this last deadline for introduction of GST, then what is the alternative available with the government? The government has any alternative, if they are missing out on this deadline? What is to be done?

Let us analyze the answers of all these issues as there are plenty of possibilities that government may not be able to roll-out GST by 16th day of September, 2017. First of all let us go through the constitutional provision under which compulsion has been provided for introduction of GST within one year.

Section 19 of 101 or Constitutional Amendment Act, 2016

2. Section 19 of 101st Constitutional Amendment Act, 2016 provides for the transitional provisions. The section 19 of 101st Constitutional Amendment Act, 2016 reads as follows:

"Transitional Provision

19. Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier."

The Section 19 has come into effect from 16th day of September, 2016. As per this section it is very clear that the provisions for levy of any taxes on goods or services or on both will not be leviable from either of the following dates:

  If GST has been introduced prior to 16.09.2017, then from that date all provisions impose taxes on goods or services or on both like Service Tax, MVAT, Entry Tax, Excise, Luxury Tax and all other taxes which are going to be subsumed in the GST will not be leviable.
  If GST has not been introduced by the end of one year, i.e., 16.09.2017, then by default as per section 19 all such provisions impose taxes on goods or services or on both like Service Tax, MVAT, Entry Tax, Excise, Luxury Tax and all other taxes which are going to be subsumed in GST will not be in force.

Therefore, even if GST has not been introduced by 16 September, 2017, all taxes on goods or services or on both will cease to be leaviable. On the other hand, GST has not been implemented and, therefore, the Government will not get any revenue. Considering this aspect, on several occasions, Mr. Arun Jaitley has also pointed out that as per the constitution it is compulsion on the part of the government to implement GST before 16th day of September, 2016 as country doesn't run without taxes.

In view of the above, most of the learned persons are of the view that it is mandatory on the part of the government to implement GST on or before16th day of September, 2017as it has been provided under the constitution and you do not have alternative available for this. Some of the learned people are also expressing their views that in such scenario to save the interest of country, the Supreme Court will have to intervene and give relief to the Government.

The Government has alternate available with them, if missing the September2017 deadline for roll-out of GST and coming on to the second view for intervention of Supreme Court, Supreme Court cannot intervene as it is a legislative issue and Supreme Court is a judicial authority.

Section 20 of the Constitution 101 of Amendment Act, 2016

3. If the Government is missing on the deadline for implementation of GST, the Government has an alternative available with them which is also provided in the constitution itself under Section 20. The section 20 of the Constitution 101st Amendment Act, 2016 reads as follows:

"Power of president to remove difficulties:

20.

(1) If any difficulty arises in giving effect to the provisions of the Constitution as amended by this Act (including any difficulty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modification of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the difficulty:

Provided that no such order shall be made after the expiry of three years from the date of such assent.

(2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament."

Comments

4. It is evident from the above that in case any difficulty arising while giving effect to the provisions of the amended constitution the President may pass an order to remove such difficulty. Such order of the President shall be "laid" before both the houses of the Parliament, i.e., Loksabha & Rajyasabha. It is pertinent to note here that such order of the President shall be "laid" before each house of the Parliament, it does not use the word "presented" or "passed" in the place of "laid". Therefore, the provision is very specific that the order passed by the President is final and will be put up before each of the house only for the information of the house. Hence, such order passed by the President is a final order.

In the present case, if government is missing out on the deadline for introduction of the GST, then the Government will definitely present before the President stating number of difficulties faced by them for implementation of the GST within such deadline and in my view the President will definitely consider such difficulties faced by the government and amend section19 of the Constitution 101st Amendment Act, 2016 wherein instead of "one year" the President may change it to "two years" and so, as he may deem fit considering the difficulties presented by the government.

Concluding Remark

5. It is evident from the above that while drafting the constitution, the Legislature has left the back door open for the government to take a shelter under section 20 by taking an order from the President to amend any of the constitutional provisions.

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