When will the GST Act come into force?

Prime Minister proposes July 2022

MB Subba

The National Assembly is expected to endorse the Goods and Services Tax (GST) Bill, but when it will come into effect is anybody’s guess.

Even after a prolonged debate yesterday, the House couldn’t decide on a date of the Act coming into force.

The issue arose because unlike other Bills, the GST Bill was silent on when it will come into force. The Bill states that the Act shall come into force through an executive order of the Cabinet.

Members expressed concerns that the government was not ready to implement the GST as soon as it is passed. Their arguments were based on the assumption that a Money Bill, which GST was declared as, has to be rushed through the ongoing session.

Prime Minister Dr Lotay Tshering proposed July 2022 as the deadline for implementation of the GST Act. But he clarified that the government would make efforts to implement the Bill even before July 2022.

Opposition Leader Pema Gyamtsho (PhD) suggested a year’s incubation period at the maximum before the Act comes into force.  “If we don’t prescribe an enforcement deadline, it won’t be wise. Otherwise, there is no need for parliament to pass the Bill within this session,” he said.

Speaker Wangchuk Namgyel supported the prime minister’s suggestion but the suggestion was not put to vote. The Speaker directed the economic and finance committee to come up with a suitable suggestion today.   

The date of enforcement of the Bill is considered important because 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.

If the Bill is passed within this session, the National Assembly should present it to the Druk Gyalpo with 15 days from the date of passing the Bill.

The proposal to suspend the implementation of the Bill that is passed by Parliament may come in conflict the Constitution, Article 13(1) of which, states that a Bill passed by Parliament shall come into force upon Assent of the Druk Gyalpo. 

Additionally, the Supreme Court judgment passed in 2011 on the first constitutional case between the government and the opposition on taxation states that “Bill relating to imposition or increase of tax must be deemed to come into force immediately on the day the Bill is introduced”.

The Bill says that the existing provisions on Taxes will be will be repealed by an executive order of the Lhengye Zhungtshog. But the problem is that a law becomes effective from the day it is passed by the parliament and given assent by the Druk Gyalpo.

One of the problems was that MPs did not cite which laws mandated that a Money Bill should be passed in the same session.  

 

Should GST be rushed?

Members said that the Bill should be passed during the ongoing session, reasoning that it was a Money Bill.

However, a closer look at constitutional provisions on passing of Bills does not mandate rushing of a Money Bill within a same session. This means that GST Bill can be submitted to the National Council (NC) for deliberation in the next session.

According to Article 13(5) of the Constitution only a Budget and Urgent Bills shall be passed in the same session of Parliament.

Money Bills and financial Bills are mentioned separately in Article 13(2) of the Constitution, which states that they shall originate only in the National Assembly. But it does not prescribe that they should be passed in the same session, unlike in the case of Budget and urgent Bills.

In his book, “Constitution of Bhutan, Principles and Philosophies”, former Chief Justice and chairman of the Constitution drafting committee, Lyonpo Sonam Tobgye, states that Article 13(5) mandates the passing of “Budget and urgent Bills” in the same session.

He argued that Bills must not be rushed without mechanical application of the mind and that adequate time should be allocated for discussion of Bills.

The Supreme Court judgment on the constitutional case between the opposition and the government also states that Money Bills are subject to the “procedure of bills” as enunciated under Article 13 of the Constitution. “The requirement of raising taxes or alteration except by law implies that it must follow the normal bill passing process.”

“The bill relating to imposition or increase of tax must be deemed to come into force immediately on the day the bill is introduced. Therefore, the legislative procedure is same as in the case of other money bills, it has to be passed by Parliament and Royal assent sought in the same session,” it stated.

The Supreme Court judgment describes budget as a money Bill. But it does not say that all money bills should be passed in the same session, unless in the case of a budget.

But the judgment clarifies that the National Council’s views are not binding on Money Bills if the National Assembly deems that is unnecessary. “The legislative procedure is same as in the case of other money bills, it has to be passed by Parliament and Royal assent sought in the same session,” the judgment states.

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