Thank you, Mr. Chairman, for giving me this opportunity to speak on a Bill, which quite frankly  will, forever, alter the manner in which we approach tax and excise in this nation.

          The old joke, Mr. Chairman, is that only two things are inevitable – death and taxes.  But death only comes once, whereas in our country, taxes keep coming and growing over and over again. 

          But let me congratulate the Government and the House for the successful passage of the GST.  As you know, my party was not totally happy with the final shape of the  Government  version of the GST, but we went along with it in the same spirit in which we had introduced the idea in the first place.  It is a good day for democracy when we, as the nation’s elected representatives, can reach out across the aisle to work with consensus in a spirit of bi-partisan cooperation. 

          I only hope that the Government continues to reach out to other parties in this august House for further consensus and bi-partisan cooperation in the future. It is my hope that consensus becomes the norm and not the exception.  But this depends on the Government, Mr. Chairman, on the Government’s attitude. Reliance on the Government’s brute majority, ignoring the arguments and reasonable amendments of the Opposition, will get Bills passed undoubtedly, but will not, Mr. Chairman, advance the national interest.  So, I was very assured to hear the words of the Minister, just now, when he said, he would pay heed to what we, in the Opposition, have to say.

          Now, Mr. Chairman, while I welcome the hon. Finance Minister’s efforts to ensure that the respective laws that they wish to amend today, are GST compliant, I must raise a few matters of concern, which pertain to the overall effectiveness of this proposal.

          First is a procedural matter, Mr. Chairman.  Two amendments dated yesterday were only received by MPs this morning.  Now, you tell me, Mr. Chairman, how are we supposed to prepare for this discussion in these circumstances?  I urge the Government to honour the House by giving people enough notice to prepare such discussions.

          But having said that, Mr. Chairman, we broadly speaking have a Bill that we can all agree with because we are trying, all of us, to make the existing regimes GST compliant.  Yet there are certain features of the Bill that seem unduly optimistic. Either we advance our country to a point where certain laws become feasible or we pass the laws and hope and pray that everybody will behave in accordance with the law. This Bill takes the latter path.  It assumes a level of competence, inter-Departmental communication and overall cooperation between various Departments of the Central Government and a level of exchange between States and the Central Government, which is not yet there at the levels needed to fully implement the processes outlined in this Bill. So, I hope, the Government’s optimism will be borne out in the implementation. 

          But let me elaborate my six principal concerns with this Bill for the attention of the Minister.

The first, Mr. Chairman, is administrative overreach.  Under the proposed Sections 108A and 108B of the Customs Act, 1962, “proper persons” – I assume customs and excise officials – will be given excessive authority to levy punitive actions against several people, individuals and institutions even like the Reserve Bank of India, the Income Tax and State GST bodies, State Electricity Boards and so on.

This is a clause, much like the provision in the Finance Bill, 2017, which allows excessive powers to IT officials   for ‘search and seizure’ and is a clear overreach in terms of administrative powers.  As it is in our country, in the hon. Finance Minister’s memorable words, we suffer form what he called ‘tax terrorism’.  It   is already asked  -- why won’t sharks attack Indian  tax inspectors?  The answer is ‘professional courtesy’. Dealing with the Indian taxman, Mr. Chairman, these days is like dealing with a careless laundry – either way you lose your shirt. 

Looking at this Bill, Mr. Chairman, "the proper officer", who would be a revenue official, will be exercising a quasi-judicial function as well, making this a case of gross administrative overreach.  The official can make the decision and he is also playing the role of the judge in the matter. Bodies which were previously functioning under a degree of autonomy will now be under the purview of these proper officers, breaking departmental hierarchy and workflow. In effect, it will be spreading the inspector raj, which my friends in the BJP have attacked for so many years. An inspector raj will now be spread over other departments, causing the functioning of other departments to become coloured by the opinions and actions of revenue officials.

The Bill will also empower authorities to collect information which is “considered relevant for the purpose of the Act”.  This is a very vague statement.  What is relevant?  Who considers it relevant? It is not defining any procedural basis for the procurement of such information. Such arbitrary powers can lead to abuse, favouritism and corruption. I would welcome clarity from the Minister in this regard as to how you are going to determine what is considered relevant for the purposes of this Act. How does this Government reward high ambition and aspiration? With high taxes! The definition of success now in our country is when you spend more to support the Government than you spend to support your family.

Through the GST, the Government has figured out how to get people to pay taxes they cannot afford, on services they do not need.  “The best things in life are free”, goes the old saying but I am sure the Minister is working to fix that too.

Now, this Government’s definition of progress seems to be when the average Indian now pays out twice as much in taxes as he formerly got in wages.   At a time, when the Government is trying to broaden the tax net, creating opportunities for abuse of tax payers is not wise policy. The Government has stated that the manner in which the information will be furnished will be notified by them.  It begs the question, what is the plan that they have made to make this overreaching proposal work?   Has this been thought-through or is the Government going to make up the rules as they go along? 

Even in an ideal scenario, given the critical shortages of personnel and basic infrastructure, now is not the best time to implement a plan that proposes fines on officials who are already over worked and under resourced.  Allocating a disproportionate amount of punitive power with one branch of the Government over the others would not be foundation for an effective delivery of the Government’s vision in this regard.

They must first seek to address the gaps in recruitment, infrastructure and connectivity between departments before these new sections of the law are implemented. 

Allow me to outline some of these issues, Mr. Chairman, taken from the Government’s own response on the issue of vacancies in Government services.  You look at the figure, which comes from the Annual Report on Pay and Allowances of Central Government Civilian Employees for 2015-16 as on 01.03.2015 published by the Pay Research Unit, Department of Expenditure, Ministry of Finance, which was cited by the hon. MoS, Dr. Jitendra Singh in response to a question in Parliament on vacancies in Central Government organisations. I am not going to give you all the details.  I have the full document with me.  But if you look at the total number of the sanctioned posts in the Central Government, you have 4,20,000 vacancies which is 11.52 per cent vacancy rate in the Central Government.  You have not filled the posts you got and now you want to give more discretionary power and more authority to your officials.

I would also like to raise the issue Mr. Chairman of the critical lack of communication between departments. I raised last year the need to adequately staff our Government departments.  I have raised in this House the question of lateral entry into Government service.  To address not the lack of qualified personnel but to also allow for the transference of best practices taken from the private sector and use it in the public sector.  Both your and our Government has had ministers, bureaucrats and other officials taken from the private sector to serve in public service, they have performed and delivered in an effective manner. 

I would like to ask the hon. Minister if he would consider a plan to allow for lateral entry to be used to fill some of the vacancies, in the various departments referred to in this bill to ensure the overall performance does not drop with the implementation of his proposal. I did receive an acknowledgement from the Government to my proposal.  We had a discussion in Question Hour here, but I am still awaiting action from the Government.

          My second point is this.  The Bill seeks to repeal certain Acts that levied cess for such causes as the Beedi Welfare Cess, and the Water (Prevention and Control of the whole Pollution) Cess.  Industrial waste is one of the major causes of water pollution.  The pollution levels in all our rivers, the Yamuna and other water bodies across India, the 44 rivers in Kerala and elsewhere are testament to an amazingly appalling rate of water pollution.  The Water Cess was levied on the consumption of water by industries.  There is justice involved in making the polluter responsible for polluting the resource.  I understand, the logic of the GST is to standardise taxes and reduce such cesses.  But since you are having additional cesses and ‘sin taxes’ anyway for luxury goods, why not for polluting activities? 

Mr. Chairman, Sir, I love the concept of ‘sin taxes’.  The Government puts a high tax on liquor and then imposes such high taxes on everything else that they drive people to liquor.  With due apologies to the interpreters, we are all reeling from a bad case of intaxication. 

But coming back from whiskey to water, Mr. Chairman, what we need today on the water crisis facing the country is a level of stewardship between the Government and the corporate world.  In order to drive the water stewardship agenda, industry should understand its own processes and responsibilities, water use, operating environment and the impact of its own operations on the environment. 

Since water is such a precious resources to us and falling levels of potable water around the world have made it imperative for us to protect and conserve whatever fresh water is still drinkable, I fail to see the logic in not taxing industrial users of water with the water cess. 

Does the Government wish to repeal its old Act and replace it with at least more stringent rules and regulations?  We seek clarity on this issue in order to protect the most valuable resource now and in the years to come. 

There is also – my third point – the rising cost burden on certain goods.  You know that petroleum, crude oil, of course does not come under the purview of GST.  So, this may not be entirely beneficial because prices may shoot up.

The Parliamentary Standing Committee on this subject observed that, “The tax liability of the upstream oil PSUs will increase as the GST rate on inputs is expected to be higher than the prevailing rate of taxation.”  This will create distortions in the market which may adversely impact industries and the citizenry which is dependent on it.

The International Energy Agency estimates that India will account for a quarter of global energy demand growth by 2040 as booming manufacturing and a bigger, richer and more-urbanised population will drive fuel growth.  It expects the country’s oil demand to reach 10 million barrels a day in the next quarter of a century which will probably be the fastest growth in demand in the world.

The Parliamentary Standing Committee, considering this, in discussing the Demands for Grants, said that since crude oil and natural gas will be kept out of the GST, the upstream companies like ONGC and OIL cannot claim credit for their money spent towards VAT on services hired and goods used for the production of petroleum products.

Further, during the actual process of refining crude oil, it seems maddeningly inefficient that some of the manufactured products would be kept under the ambit of the GST while some of them would not.  There is a complete lack of consistency. 

This has not escaped the attention of the Parliamentary Standing Committee either.  They flagged this and noted, this will result in distortions in pricing of the product as well as an increase in the input cost of the oil companies.

Industry experts have pointed out that this will inevitably have a negative effect on the oil, petroleum and petrochemical industries.  How can the same industry be expected to follow two tax regimes: the existing model as well as its successor, the GST? 

This would drive up the operational costs of manufacturing and this is something which the Committee/Ministry has also reiterated. There is likely to be a cascading effect across the supply chain, with either the customer or the manufacturer or both taking a hit.

          So, the Committee had recommended that “oil PSUs companies should be able to get adjustment of full VAT credit for the total amount against VAT that have been paid by them on inputs and services.”  I would urge the Finance Ministry to discuss with the Ministry of Petroleum and Natural Gas how you can give full credit of VAT to oil companies to mitigate to some degree the effect of these parallel taxation systems which we are creating today.

          One of the main questions here is what are the safeguards that the Government has instituted to ensure that Indian oil prices are not completely vulnerable to the harsh volatility of global crude prices?

          Mr. Chairman, I am abbreviating my points. The fourth point is about beedi products. Tobacco has been rightly taxed by the Minister – GST plus additional excise plus sin taxes.  Now, despite the fact that tobacco has been proven to be a harmful substance to human health, there is a lower tax demand placed on beedi products than other tobacco products.  Cigarettes which are made in controlled environments under strict supervision are heavily taxed in order to discourage consumers from consuming them, which is fine.  But beedi products which are generally home-made or run as cottage industry programmes, are not and this is not so good.

          As per the Government’s list of tariff items, beedis made without the use of a machine have an Excise Duty of only Rs. 12 per thousand hand rolled beedis.  This discrepancy leads to a higher consumption of beedi products, especially amongst people who are poor and illiterate.  Why is it that we charge cigarette smokers extra and place gory images on their packets, while letting beedi smokers have their harmful habit without informing them of the potential risks?  Are we saying that the health of the poor beedi smoker does not matter as much as that of the more affluent cigarette smoker? I believe that it is in the interest of the Government to promote better health, especially among the poor and illiterate citizens.

          Standardisation of beedi rolling, along with placement in a higher tax bracket would make these products less accessible to public. Beedi manufacturers would in fact also prefer small nimble hands to roll their products, so they employ women and children quite often, keeping them away from schools and higher education. This industry does not need any more concessions. It requires heavy sanctions for the sake of the public.

          And what is more, they have repealed the Beedi Welfare Cess which begs the question as to who is the Government trying to help - the masters of a harmful industry or the poor workers and their families who have no choice?

          Mr. Chairman, I have a fifth point. I will be very brief on the last two points. This is about Central Excise Act 1944 and 1985 – levy of Excise Duty.

          Our taxes are pretty onerous. Studying this Bill really taxes the imagination- which was the one thing we thought the Government could not tax.

          At present, the Central Excise duty is levied on goods such as tobacco, petroleum products, rubber, oils, vehicles etc. The proposed change on the levy seeks to ensure that only certain products fall under the new levy, namely, petroleum products such as motor spirit, high speed diesel, aviation fuel and tobacco products.

          These goods are mentioned in the 1985 Central Excise Act and now will be moved to a new proposed fourth schedule to be attached to the Central Excise Act, 1944, as the new GST is repealing the 1985 Act. That is what we understood from the Central Goods and Services Tax Bill. 

          Now, at present, the Government has the power to charge Excise Duties through notification in emergency circumstances as per the 1985 Act but with the Taxation Laws Amendment Bill which we are just passing, it now also seeks to allow the Government to amend the proposed Fourth Schedule which means the Government would have the power to decide which goods fall under Central Excise with a notification, like, having emergency powers. Therefore, with the enactment of two new proposed sections 3B and 3C, the powers as defined by the Government mean that it can amend the rate and materials that fall under Central Excise. This is very worrying, Mr. Chairman.

          I welcome the safeguards enshrined within the Bill that the notifications will be laid in front of the House. But I do need clarity from the Government under what circumstances it envisions in the proposed Section 3B, which says that the Central Government can increase the duty legible in respect of any goods if the circumstances exist which render it necessary to take immediate action.

          Now, where is the reference to public goods?  What are the circumstances? Who decides the circumstances? They should come with some restrictions especially when the emergency powers increases the duty and does not reduce it.

 Finally, Mr. Chairman, my last concern relates to the risks of delay in implementation.

          For the GST to be successful, it requires the harmonization and classification of goods in order to prevent maladministration and also for ‘Ease of Doing Business’. But the problem is whether the implementation will take place immediately. If there are delays till September as recently suggested, this may leave individuals stranded between conflicting laws and their implementation. Even the complementary rules and laws, the Government is supposed to frame, are being pushed close to the deadline thereby pressurising stakeholders to accept changes in a rush while leaving businesses with a little time to adapt to the tax structure.

          So, Mr. Chairman, we support this Bill but we urge the Government to take these six concerns into serious consideration and to amend the regulations accordingly.  Thank you.