With GST highly unlikely to see the light of the day on
April 1, 2016, the Make in India dream appears to be under threat
at this stage.
Roadblock to the introduction of GST
The Constitutional Amendment (122nd) Bill, 2014 for
amendment of the Constitution of India to introduce GST was
introduced in the Lok Sabha on December 19, 2014. As the current
Government had ample majority in the Lok Sabha, the bill was passed
by the lower house on May 6, 2015. However, due to lack of majority
in the Rajya Sabha, the GST has hit a roadblock at the Upper House
of the Parliament.
GST still has a long way to go before it is finally enacted.
After the Bill is passed in both the Houses of Parliament by two
thirds majority, the Bill will be sent to the State Legislatures
for ratification. The ratification by at least 50 per cent of the
State Legislature will be required before the proposed Constitution
amendments are brought into effect.
Thereafter, the Parliament would be required to legislate laws
pertaining to CGST and IGST. The State Legislatures would legislate
laws relating to SGST.
The current conundrum
Going by the current conundrum, whereby the Bill has been
blocked by the opposition owing to political reasons, it appears to
be highly unlikely that the GST would be reality even on April 1,
2016, as was promised by the Finance Minister during his Budget
In a recent development, the government was contemplating
reconvening the Parliament's monsoon session, which was
adjourned sine die on August 17, 2015 owing to continued disruption
by the opposition. However, the government failed to arrive at any
consensus with the opposition and hence the house could not be
reconvened. As per media reports, the FM appears to have admitted
that the GST would not see the light of the day on April 1,
The above development is clearly a major setback and has dented
the confidence of both domestic manufacturing companies and foreign
investors & foreign manufacturing companies, who were looking
forward to GST which could have revived their interest in the
Indian manufacturing sector. The Make in India dream to convert
India into a manufacturing hub appears to be threatened at this
As per certain recent reports, a foreign company proposing to
set up manufacturing units India has been advised not to invest on
account of uncertainty on the introduction of GST.
GST: A national agenda
The repeated blocking of the passage of the GST bill in the
Parliament by the opposition, in the recently concluded monsoon
session was unequivocally condemned by the industry. Though, this
had no impact and no business was allowed to be conducted during
the entire monsoon session, the need of the hour is for the
industry to speak in one voice and continue its push for rolling
out this reformative legislation.
GST is an apolitical issue and is much needed indirect tax
reform to usher in a manufacturing revolution in India. GST is not
only investor or business friendly but also consumer friendly. Also
Make in India should not be viewed as a political agenda but a
national agenda, which would put India as a strong global player in
the global map as a manufacturing hub and simultaneously create job
opportunities to the youth of this country.
GST is the need of the hour and any hindrance to its enactment,
whether political or otherwise, is clearly unwarranted and not in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Recently the Delhi High Court's in the case of CUB Pty Ltd granted relief to multinationals licensing and registering their intellectual property in India and held that the situs of an intangible asset like IPRs, shall be the situs of the owner of such asset.
Mumbai Income Tax Appellate Tribunal in the case of Praful Chandaria, dealt with the issue of taxability of consideration received by the assessee pursuant to grant of call option in respect of shares of an Indian company.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).