MB Subba

The National Assembly yesterday passed the much touted Goods and Services Tax (GST) Bill 2020 despite legal questions surrounding the House’s decision to defer its implementation.

Prime Minister Dr Lotay Tshering initially said that the government would implement the GST by July 1, 2022. He said that the two-year incubation period was required in view of the need to develop GST billing software and carry out sensitisation programmes.

However, opposition members insisted that the Bill must prescribe the effective date to avoid possible delays in implementation on various pretexts. Opposition Leader Pema Gyamtsho (PhD) suggested July 1, 2021 as the deadline for implementation.

The prime minister partially gave in and proposed that Chapters 7, 8, 9 and 10 of the Bill be implemented from July 1, 2021, which the House accepted. The four Chapters contain Sections regarding accounting for GST, payment of GST, refund of net amounts and registration for payment of GST.

“These Chapters need the software for implementation. The rest can be implemented immediately,” Dr Lotay Tshering said.  

The Bill has 30 chapters, 358 sections and 10 schedules.

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

Out of 43 members present, 34 members voted Yes for the Bill, while eight abstained. Panbang MP Dorji Wangdi was the lone member who voted No.

Clarifying his stand, the Panbang MP said that he supported the overall objective of the GST, but that he could not vote for the Bill due to legal issues and uncertainty in implementation. He also said that the Bill needed to be refined.

“Money Bills are a prerogative of Parliament. But the GST Bill hands over Parliament’s power to the Cabinet,” he said.

Dorji Wangdi said that the Bill should not have been introduced as a money Bill. He justified that GST was only about the principle and design of taxes.

To set the tone of the debate, Speaker Wangchuk Namgyel cited Article 20(8) of the Constitution which states, “The Executive shall not issue any executive order, circular, rule or notification which is inconsistent with or shall have the effect of modifying, varying or superseding any provision of a law made by parliament or a law in force.”

However, the government argued that convenience and readiness of the government needed to be considered. The prime minister said that laws needed to be interpreted in the right context and that legal issues should not arise if the parliament agreed on deferring implementation.

Drametse Ngatshang MP Ugyen Wangdi said that the House should fix the effective date based on the time required to develop the GST software.  “Otherwise, implementation can be delayed on various pretexts,” he said.

The prime minister requested members not to doubt the government’s intention, saying that the GST would be implemented as soon as possible.

“If government has no intention to implement, then we would not have tabled it in parliament. Our concern is what if the software is not ready within the date prescribed in the Bill,” he said.

Dr Lotay Tshering said the GST could be implemented within six months if the government bought ready-made software from outside. The government has outsourced the software work to the Druk Holding and Investments (DHI).

Panbang MP Dorji Wangdi said that the government had backtracked from its initial stand to implement the GST immediately. “Earlier, the government said that the GST would be implemented immediately, but now it wants to defer,” he said.

Citing the Public Finance Act and the Supreme Court judgment in the first constitutional case of 2011, the Panbang MP said a money Bill should become effective from the day it is introduced by the Finance Minister in the National Assembly.

However, the prime minister disagreed. He cited the examples of other money Bills, including the Tourism Levy and Exemption Bill 2020, whose effective date has been fixed as July 2020.

The Bill repeals several sections and clauses of the Tax revision Act 2011, Revised Taxes and Levies Act of Bhutan, 2016 and Tax (Amendment) Act of Bhutan 2020.