In 2006, the UPA Government announced that a comprehensive GST would be

launched on 1st April, 2010 and it was believed that the introduction of GST is a
difficult task, as our current indirect tax structure is driven by multiplicity of taxes.
Some levied by the centre while others by the state. The new tax reform aims to
bring together the machinery of central and state governments to jointly work for
better enforcement of taxes but this had created confusion on various aspects
between Centre and State and thus cause delay in the implementation of GST.
States including Rajasthan, Gujarat, Madhya Pradesh and Tamil Nadu demanded
deferment of GST implementation as there was no consensus on its various aspects.
There was much dispute on the reduction of Central Sales Tax (CST). Due to CST
reduction some states were losing revenues in crores annually. Another controversy
arose in the matter of petroleum and alcohol. There are restrictions on availing
credit of taxes paid on fuels. Further, the Task Force has recommended a dual levy
on tobacco and alcohol with restrictions on credit. The Enforcement Committee
aligned with the Task Force on Tobacco, however in case of alcohol they suggested
that it should be out of the ambit of GST while Vat and excise duty should be
continued.
National Democratic Alliance (NDA) has displayed admirable speed in getting the 29
states and 7 Union Territories into some sort of agreement for GST implementation
late last year. This was a big breakthrough but despite the speedy Cabinet approval,
still there are hurdles in implementing GST by the target date of 1 st April, 2016. As
the Bill was introduced in the parliament, on the demands of several political parties
like Congress, AIADMK and BJD it was sent to the Standing Committee by the upper
house of the parliament in the 2nd half of the Budget session in May. Later, in the
monsoon session after the standing committee nod, the GST Bill was tabled in the
Parliament and it did sail through the Lok Sabha where the government is in
majority. But the main obstruction came for the passage of the bill in the Upper
House of the Parliament. The tortuous process of other significant reform bills such
as Land Acquisition Bill doesnt raise any hope for a speedy passage of GST Bill in
the Rajya Sabha , where the NDA government doesnt have the requisite numbers
to push through the bill on their own. Out of the total 245 members in the Upper
House, the NDA coalition needs to get a two third majority ie. Support of 163 MPs to
get the constitutional amendment bill passed. BJP has only 48 members and total
strength of NDA is 63 and the ruling party has a hard task of getting other parties
support to get the bill passed in Rajya Sabha which has been made more difficult by
the latest verdict against BJP and unification of the opposition parties in the Bihar
Assembly elections.
The government will have to reach out to the main opposition party, Congress if the
GST bill is to get passed in the Rajya Sabha. Even if both the Houses of Parliament
pass the bill, there still remains the process of ratification by all the State
legislatures before the bill can be enshrined in the statute books. Each state
legislature will have to amend its own taxation laws and after all this, there is the

real contentious issue of the GST rate that must be finalized. Since the GST will
subsume a plethora of central excise and state taxes on goods and for the first time,
on services, the disagreements have been so fierce which only suggest further
delays.
The vital Information Technology (IT) backbone that will integrate states disparate
value-added tax systems into an all-India network, a mammoth task for the GST
Network, the quasi government company that will implement the system, will
remain incomplete. The GSTN currently faces a chicken and egg situation: it needs
to get to work right away in appointing a service provider and testing a system that
will involve 6.5 million dealers in myriad intricate transactions. Yet it cant get
started until these issues are sorted out and the law passed; no IT company will sign
on until there is clarity on multiple fronts. All this will take its own time, a luxury
which GSTN doesnt appear to have since it has been given April 1 st, 2016 as hard
target.
The GST is a critical component of the efforts to improve Indias standing in Easy of
Doing Business metrics so it is of utmost importance that all stakeholders rise
above the vested interests and help India make a giant leap forward.