Null and void

The rise in GST.

When the finance minister presented the budget, he presumed that the government could impose the one per cent proposed increase in GST by simply announcing it. It was supposed that since this had been a practice in the past based on the British-era Provisional Collection Taxes Act 1931, there was no bar in following it this time too. After all the PML-N had a comfortable majority in the NA which ensured that the measure would be passed. Immediately after the budget announcement the prices of petroleum products were increased by the dealers. As a consequence, the transport charges went up and there was bound to be an increase in the price of practically every commodity leading to public protests. The Supreme Court has thrown a spanner in the administration’s works by ruling that the tax hike is in conflict with the article 77 of the constitution which lays down that that the federation cannot levy any tax without the prior sanction of the parliament. The court has demanded the withdrawal of the recent increase in petroleum prices and of nine per cent additional sales tax on CNG and ordered the government to deposit all the money recovered with the office of the Supreme Court Registrar.

The government wanted to present a business-friendly budget, while the common man expected a people-friendly one. A sensible way out would have been to bring into the tax net over a million rich tax evaders and tax the agricultural incomes. The government instead went for a highly regressive GST hike which has hit the common man badly. The Supreme Court order would be hailed by those feeling the pinch of the new spurt in inflation. But lawmaking is the business of the parliament rather than of the apex court. After the recent meetings with the IMF delegation, the government is unlikely to take back the increase in GST rate. The NA is going to pass the budget document in the next few days. The court’s observations on Thursday indicate that besides the objection on the way the GST was implemented, the court also had humanitarian concerns in view. It maintained that if the provisional tax was allowed to be implemented, people would lose confidence in the parliament. The loser in this case however would be the ruling party rather than the parliament where the combined opposition is already opposing the GST hike.

The court order would presumably turn out to be a temporary embarrassment for the government. This confrontation between the government and the Supreme Court within weeks of the PML-N’s assumption of power however does not bode well for the system. Hopefully the government would in future avoid acting as a representative of just one section of the population. What is needed in democracy is consensus, a balancing of competing interests through give and take, rather than reliance on the numerical strength in the parliament alone. Hopefully the Supreme Court too would take recourse to suo motu action only in exceptional cases.