It was Congress President Sonia Gandhi who did most of the talking during the 45-minute meeting with Narendra Modi on Friday evening. It was to her that the prime minister and his two senior ministers, Finance Minister Arun Jaitley and Parliamentary Affairs Minister Venkaiah Naidu, responded and did all the explaining on the sticky points of the Goods and Services Tax Bill. They also spoke to her on the need for smooth functioning of the Winter Session of Parliament for the passage of several other pending legislative businesses.
Former prime minister Manmohan Singh, who accompanied Sonia to the prime minister’s official residence at 7 Race Course Road, mostly sat quietly through the meeting. He was the principal architect of the GST Bill. The impression which the three top ruling leaders got from Singh’s limited response was that he didn’t think that the Congress’s objections had much merit and were viable. But then he is not the person in command in Congress.
Contrary to the popular perception that Modi was not reaching out to Opposition leaders, Gandhi in particular, a top government source said Modi wanted to have a meeting with the latter on GST and other issues during the Monsoon Session but then it was conveyed by the Congress that it was not the opportune time for such a meeting. The Congress then was bent on securing the resignations of Sushma Swaraj, Shivraj Singh Chauhan and Vasundhara Raje. GST was then nowhere on their radar. By Winter Session, circumstances changed.
When Jaitley briefed Sonia and Manmohan on the background, history and view of the government on the three objections – first, doing away one per cent additional tax benefit to the producing states and spreading it uniformly to all the states; second, constitutional cap of 18 per cent, and third, an independent dispute redressal mechanism or setting up adjudication authority – the two leaders seemed to be positive in their attitude. They told PM Modi and the two ministers that they (Sonia-Manmohan) would consult on the subject with their party and respond.
After that meeting was over, Jaitley had told media persons that the government would establish fresh contact with the main Opposition party and carry forward the negations or so-called consultation process.
When asked, “What’s the outcome of the meeting, will GST baby will be delivered in this session?,” a senior BJP leader quipped “Pregnancy is in advance stage, labour pain is being felt”.
Sources said after that big meeting, which had almost assumed proportions of a summit, was over the parliamentary affairs minister spoke to Leader of Opposition in Rajya Sabha Ghulam Nabi Azad, Leader of Congress in Lok Sabha Mallikarjun Kharge and Jyotiraditya Scindia.
The government is not agreeable to the three objections put forward by the Congress. “How can you provide for a cap on taxes in Constitution and create flawed tax architecture. You can’t have constitutional amendments for increasing or decreasing tax, each time it’s felt and go through that cumbersome process. More so, what wisdom would suggest that you put a cap of 18 percent on super luxurious items, including on cars like BMW, Rolls Royce. You can’t also put a lower tax cap on liquor and tobacco products. In a country like India you need three different kinds of tax structures on goods – one meant for the poor, other on items of mass consumption in urban areas and the third on luxury items,” a top BJP leader said.
On the issue of one percent additional tax to producing states, he said this was being negotiated.
On the Congress’ third objection or insistence on setting up of an adjudication authority, government sources said, “No chief minister would allow that. Taxation was the exclusive domain of the Legislature and the Executive and it can’t be handed over to a Supreme Court Judge or to judiciary (as adjudication authority head). Even the Congress chief ministers would not like that. This can’t be negotiated.”
He, however, said that the government had an alternative mechanism in mind for all the three objections put forward by the Congress. The alternate proposals have been conveyed to the Opposition leaders but the government sources are not willing to reveal it yet.
Were Sonia and Manmohan convinced by the government’s arguments? Sources said they seemed to be favourable but perhaps the final call would be taken by Rahul Gandhi. Top government functionaries are cautious in committing whether GST was a done deal. They had a last minute slip up on GST in the Budget Session.