Heated exchanges break out, PM’s announcement flayed

The effect of the BJP’s loss in three States in the Hindi heartland was visible at the GST Council meeting held on Saturday in New Delhi, with the famous accord of the Council across party lines disrupted by a heated exchange among members.

As the meeting got under way, the Ministers representing various States ruled by the Congress and other Opposition parties led by Puducherry Chief Minister V. Narayanswamy said the failure of an upward trend in revenue collection under the GST should be taken into account before suggesting rate cuts.

This was contradictory to the political stance taken by the Congress which has batted for rates to be capped at 18%.

Two-hour debate

There was a nearly two-hour debate on the issue with other State governments led by Opposition parties supporting this view. Union Finance Minister Arun Jaitley has time and again remarked that the strength of the decisions taken by the GST Council over its numerous meetings was that none of the items came to a vote and that all were agreed to unanimously.

At one point on Saturday, according to sources, West Bengal Finance Minister Amit Mitra also pointed out that Prime Minister Narendra Modi’s recent declaration at an event that most goods and services would be removed from the 28% bracket to 18%, and that 99% of the items would be placed at 18% or lower, was unseemly and that Mr. Modi had no locus standi to make such an announcement without the Council’s concurrence.

Call to order

At this, Assam Finance Minister Himanta Biswa Sarma intervened and said that in such a scenario, it would be better if the remarks were minuted and members be allowed to brief the press fully. This ended the discussion and both sides backed off.

Finally, the GST Council decided to cut rates on 17 items and six services. This left only one common use item, cement, in the 28% category. Mr. Jaitley said the revenue impact of cutting the tax rate on cement was such that the Council decided to take a call on it only once revenues showed stronger growth.