Bihar on Tuesday became the first non-National Democratic Alliance state to ratify the Constitution Amendment Bill on the goods and services tax after Chief Minister Nitish Kumar counted virtues of the tax reform.
With all the major parties in the state including Janata Dal-United, Rashtria Janata Dal, Congress and Bharatiya Janata Party in favour of the tax legislation, the House approved the GST bill through a voice vote.
Communist Party of India-Marxist Leninist MLA Mehboob Alam opposed GST and staged a walkout. The CPI-ML has three MLAs but only Alam was present.
After ratification by the legislative assembly, the GST bill was introduced in state's Upper House. Passage of the GST by Bihar legislative council is a mere formality after its ratification with consent of all major parties in the state.
Bihar became the first non-NDA state and overall second after the BJP-ruled Assam to pass GST bill.
The Constitution (122nd Amendment) Bill, 2014 on the GST has already been passed by Lok Sabha and Rajya Sabha.
The GST Bill, seen as single biggest tax reform after Independence, needs to be ratified by at least 15 state legislatures out of a total of 29 before the President notify GST Council which will decide new tax rate and other issues.
The central government has set a deadline of April, 2017 for its rollout.
Intervening in the discussion on the GST Bill piloted by Commercial Tax minister Bijendra Prasad Yadav, Chief Minister Nitish Kumar highlighted virtues of the new tax legislation.
The chief minister said he has been in support of the GST from the beginning as it was beneficial for a consumer state like Bihar and has been in favour of it when it was piloted first during the United Progressive Alliance time in 2006-7 by then Finance Minister Pranab Mukherjee.
Counting virtues of the GST, Kumar said it would bring transparency in tax collection and distribution among the Centre and the states.
In addition the new tax reform would enable a state to earn a handsome portion from the service tax which earlier used to be an exclusive source of earning for the Union government. The state would have its share from service tax on telecom, railway, bank and power among others which would bring handsome cash to us, he said.
The GST would bring parity between manufacturing and consumer states and also do away with expenses on maintaining checkposts on state borders.
The GST Council to come up for implementation of the GST will have 67 per cent weightage against 33 per cent of the Centre.
To pass any resolution in the Council a minimum of 75 per cent support of members, Centre and states, would be needed which is an assurance that states concern cannot be ignored.
But, besides lauding the GST, Kumar also expressed certain concerns which he said would be stand point of the state during process of formulation of laws on the GST.
The Bihar chief minister said although he was against capping on the rate of the GST, it should be the concern of both the Centre and the states to keep the tax rate at a reasonable level to prevent it from having an inflationary effect.
Kumar said the state has wholeheartedly supported the GST in principle but would place its standpoint in the GST Council during formulation of laws by the Centre and the state for its implementation.
The first concern of Bihar would be that small traders upto Rs 1.5 crore should be taxed only by the state and they should not be brought under the Centre's domain.
In addition, for trade above Rs 1.5 crore, the machinery to collect the GST should be the exclusive right of the state and the Central Commercial Tax department need not interfere in it in any state.
The state machinery would collect GST on trade above Rs 1.5 crore and would honestly give the due share to the Centre and retain its own.
"We are against Central Commercial tax department opening office at district level and officials of both state and the Centre conducting raids for tax realisation from traders which would result in their harassment," he said.
Besides, Information Technology arrangement developed for implementation of the GST needs to be well integrated with banks, railways, telecom and power to help the state realise its share of service tax on these services, he added.
Kumar said he has held talks with his West Bengal counterpart Mamata Banerjee on the GST and how to protect interest of states during implementation of the new taxation system.
Survey suggests that there are more than six crore mobile phone users in Bihar besides Railway passengers and unloading of railway freight would generate handsome revenue to state, he said.
Earlier, after introducing the GST bill, Commercial Tax Minister Bijendra Prasad Yadav listed benefits of the new taxation law and also hailed the chief minister for being an important force for the GST legislation.
Leader of opposition Prem Kumar thanked Prime Minister Narendra Modi and Union Finance Minister Arun Jaitley for the initiative to make GST operational.
Congress Legislature party leader Sadanand Singh said it was the Congress which first introduced the GST which could not be passed during the UPA regime due to opposition from BJP-ruled states.
CPI-ML MLA Mehboob Alam opposed GST Legislation which he said symbolised "tax terrorism" introduced on behalf of capitalist oriented World Bank and International Monetary Fund.