NC’s good governance committee suggests so, citing legal provisions

MB Subba

The government’s initiative of the Goods and Service Tax (GST) hit a wall in the house of review, National Council.

The Council’s Good Governance Committee yesterday recommended the government to either withdraw or defer the GST Bill 2020.

The recommendation was made to the finance minister soon after the Bill was introduced in the House citing the government’s lack of readiness to implement GST as per the Public Finance Act 2012.

The government has said that development of GST billing software is expected to take about a year. But according to the Public Finance Act, GST should become effective from the day it is introduced in the National Assembly.

Chairman of the good governance committee, Lhatu, said that GST in India was introduced after amendment of relevant laws, including its Constitution. Withdrawal of the Bill, he said, would give time for the government to prepare for implementation and to avoid violation of laws.

Lhatu cautioned the finance minister that the Public Finance Act would be violated if the Bill were to be passed and implementation deferred.

He cited Section 46B of the Act, which states, “The imposition or increase of any tax or abolition, reduction or remission of any existing tax once passed as law by Parliament, shall be applied retroactively from the date it was initially tabled in the National Assembly.”

“If the Bill becomes a law despite the concerns, we are worried that the Public Finance Act will be violated,” Lhatu said. He asked how the government would address the legal issues if the Bill were to be passed.

The committee chairman said that the committee supported the overall objective of the GST, which according to him, was expected to improve the economy and help the country achieve self-reliance.

But Lhatu drew the finance minister’s attention to the issues surrounding the Bill, saying that the GST billing software was being developed only after passing of the Bill. The committee, he said, had held discussions on the Bill.

“We asked among ourselves whether the software could be developed only after passing the Bill. We felt that the software can be developed even before the GST Bill is passed,” he said.

Member from Haa, Ugyen Namgay, said that the provisions of the Public Finance Act on the effective date must be respected. He said that the finance ministry as the main custodian of the Public Finance Act should abide by its provisions.

He also said that there were possibilities of deliberating the Bill as other non-money Bills, so that the government would be ready for implementation when the GST law is enacted. “It would take about one and a half years if it is deliberated as a normal Bill,” he said.

Finance Minister Namgay Tshering said that except Chapters 7, 8 9 and 10, all the provisions of the Bill would be implemented as per the Public Finance Act. The four Chapters are on accounting for GST, payment of GST, refund of net amounts and registration for payment of GST.

The four Chapters, he said, would be implemented from July 1, 2021 as an exception. “The rest of the Chapters will be applied retrospectively from the day of introduction in the National Assembly as per the Public Finance Act,” he said.

The finance minister said it was not possible to implement all money Bills retrospectively from the day it is introduced in parliament. He said that some of the Money Bills in the past had become effective as per the Public Finance Act.

As per Article 13(1) of the Constitution, a Bill passed by Parliament shall come into force upon the assent of the Druk Gyalpo.

The finance minister explained that the Bill aimed to broaden the tax base and modernize taxation system to facilitate the development of a vibrant economy.

The House is expected to deliberate on the Bill further in the coming days.