Vol. XL No. 32 August 07, 2016

Constitution Amendment Bill, Not GST

Political Commentator

CONSIDERABLE confusion has been spread by the corporate media that the Rajya Sabha approved the GST Bill on August 3.  In this context, it must be understood that, as the Indian constitution stands at present, a Central Tax on Goods and Services cannot be imposed by the central government.  The constitution needs to be amended to allow the legislation of a centralised Goods and Services Tax. What the Rajya Sabha did on August 3 was to approve such a constitutional amendment which enables the central government to bring a GST legislation.

This effort to amend the constitution was undertaken in the Lok Sabha earlier and an amendment was approved and sent to the Rajya Sabha for its endorsement.  The Rajya Sabha, in its wisdom, felt that the amendment passed by the Lok Sabha was inadequate and needed much improvement to protect the federal structure and the rights of the state governments enshrined in our constitution.

The Rajya Sabha, therefore, elected a select committee from amongst its members to conduct this exercise and come with a set of recommendations, ie, amendments to the Constitutional Amendment Bill which was approved by the Lok Sabha.  This select committee presented its report containing the suggestions for amending the Constitutional Amendment Bill as passed by the Lok Sabha.  The CPI(M) member in the select committee submitted a note of dissent listing some more amendments that need to be considered.

On the basis of the select committee’s recommendations, the government had to accept most of the substantive points and the government moved official amendments to the Lok Sabha legislation in the Rajya Sabha. 




Having adopted the path of capitalist development in India, the Indian ruling classes have relentlessly sought for a unified market and a simplified tax regime in order to maximise profits.  With the adoption of neo-liberal reforms in 1991, the clamour for such a unified market with a centrally-simplified tax regime redoubled.  These efforts resulted in the first encroachment on the rights of the state governments to raise resources through sales tax with the imposition of the Value Added Tax (VAT).  Soon after, the Indian ruling classes pursued vigorously to extend the VAT regime to a centralised Goods and Services Tax bringing services into the ambit of a centralised tax structure.  Thus originated the efforts for a GST. 

During the course of the last two decades, discussions with the state governments resulted in the setting up of an Empowered State Finance Ministers Committee to discuss and concretise these issues.  The GST Empowered Committee was chaired initially by the West Bengal Left Front government finance minister. Later, when the Left Front lost the West Bengal state assembly elections, the Kerala state finance minister assumed the chair of this empowered committee.  Currently, the chair is the West Bengal finance minister. 

The GST legislation will be examined by this empowered committee.  This will then be brought before the parliament to be enacted as a law.  This can, however, happen only after the constitution has been amended.  This is precisely what has currently been done by the parliament. 

What was approved by the Rajya Sabha was the Lok Sabha Constitutional Amendment Bill as amended by the Rajya Sabha on August 3.  This will now go back to the Lok Sabha for its approval.  This, however, will happen only after the Rajya Sabha Bill is sent to the president of India under whose direction it will go to the Lok Sabha for consideration and approval.

After the Lok Sabha approves, this amended Bill will go back to the president of India who will then send it to all the elected state assemblies in the country for their consideration. Only when 50 percent or more of the state assemblies approve this constitutional amendment with a two-third majority of the assembly members present and voting, will this Bill be returned to the president of India who will then notify the amendment to the constitution.

Until this procedure, as laid out in the Indian constitution, of amending the constitution is completed, the central government cannot bring a GST Bill for consideration of the parliament.

It is when this Bill comes before the parliament that the major concerns raised by the CPI(M) will be discussed, debated and decided upon.  It is at this stage that the CPI(M)’s consistent fight and struggle against the neo-liberal economic policy trajectory being vigorously followed by this BJP-led NDA government will be undertaken.




Even during the debate on the Constitution Amendment Bill, the CPI(M) had flagged its serious concerns and forewarned the parliament of its opposition on certain important issues.

The first concerns the rights of the states to raise revenues to improve the welfare of the people who elected the state governments. How this will be done is a matter of crucial importance.  The CPI(M) is committed to uphold the rights of the elected state governments and the federal structure of our constitution.

Secondly, three legislations would be necessary to be approved by the parliament for any GST regime to be put in place.  These are: (a) a Central GST (CGST) (b) an Inter State GST (IGST) and (c) a State GST (SGST).  These will also have to be approved by the concerned state assemblies. 

Thirdly, during this process, the CPI(M)’s efforts would be to ensure that the GST does not impose greater burdens on the vast majority of our people.  The GST is an indirect tax regime and all indirect taxes, by definition, impose burdens on the people who eventually pay these taxes when they purchase or consume the respective commodities which are so taxed.  While direct taxes collect revenues from the rich, indirect taxes collect revenues by imposing fresh burdens on the people.  Already in India, the direct tax component of central revenues is being constantly reduced and the indirect tax collections are correspondingly increased.  Currently, nearly two-thirds of the central government revenues come from indirect taxes.

A high instance of indirect tax and a lowering of the direct tax means enriching the rich and impoverishing the poor.  Unless proper checks and safeguards are put in place, when these legislations are considered by the parliament, the GST may end up in widening the already wide income disparities in our country.  This will further consolidate the process of creating two Indias – the shining one for the rich and a suffering one for the vast majority of our people.

The CPI(M) is committed to keep these fundamental issues, apart from many others, upper most in its concerns when the GST Bills come up for consideration in the parliament.

Simultaneously, the CPI(M) will strengthen the people’s  struggles outside the parliament to oppose any further attacks on their livelihood through legislations aimed at further advancing the neo-liberal economic reform trajectory.

Finally, the CPI(M) will oppose all efforts of this BJP government to manipulate and bypass the Rajya Sabha, where the BJP does not have  a majority, by having the GST Bill declared as a  “money bill” by the Lok Sabha speaker.  The CPI(M) has consistently  opposed the subterfuge being undertaken by this government to bypass the Rajya Sabha in order to impose further neo-liberal reforms on the strength of its majority in the Lok Sabha.

The people must, hence, be prepared to face these battles in resisting such neo-liberal reforms which impose further burdens on their livelihood, both inside and outside the parliament.