Punjab finance minister Manpreet Singh Badal on Tuesday escalated his demand to check the excessive tax rule making powers of bureaucrats by seeking a legal review.
Badal, in a letter, urged union finance minister Nirmala Sitharaman for a review of bureaucrats’ GST rule making powers by the union law ministry or by the Attorney General as GST laws clearly specified that rule changes have to be as recommended by the Council comprising elected members.
Badal said his appeal was not aimed at fault finding, but for enhancing the Council’s ability to collectively make decisions that are backed by consensus and remain unsusceptible to potential future legal challenges. He said Punjab’s observations in this context at last Friday’s Council meeting were not well received, despite some support from other states. Deliberations on this matter turned political rather than paying heed to the principle behind the suggestions.
“It is my firm conviction that this issue is of the utmost importance and must be examined with all seriousness by the finance ministry,” Badal said, while suggesting that the law ministry and the AG may be consulted.
“I would not be remiss in declaring the practice of bureaucrats judging with final authority the observations of Council members most humiliating. I would be happy to stand corrected if an opinion of the law ministry or the Honourable AG is taken and proves contrary to my line of logic,” said Badal.
He also pointed out section 164 of the Central GST Act, which says the central government may make rules on recommendations of GST Council. He also said that jurisprudential tradition ensures that rules cannot be used for restraining the rights of taxpayers and imposing additional fetters of a substantial nature. Badal’s concerns refer to tightening of rules by a panel of central and state bureaucrats called the GST implementation committee which takes decisions in the period between Council meetings.
Punjab’s concerns stem from the hardships many businesses face due to tightening of GST rules, especially restricting input tax credit if their suppliers who collected tax, have not remitted it to the government. Restriction of tax credits would mean meeting the tax liability with cash payment, which businesses with cashflow problems would find problematic.
An email sent to the finance ministry seeking comments for the story on Wednesday remained unanswered at the time of publishing.