QUESTION : Give key challenges in the  implementation of GST and does it affect the federal structure of the country and the role of GST Council in reducing tax evasion ?  

43rd GST Council Meeting 
Key recommendations made during 43rd GST Council meeting and why it is a missed opportunity.
43rd GST Council Meeting took place recently. Several measures were announced however, they failed to inspire any hope of recovery from the disastrous impacts of 2nd wave of the pandemic.
• GST Amnesty Scheme for small firms pending GST returns–
o The scheme has been recommended for reducing late fees. Now Taxpayers can file pending returns, avail benefits of the scheme, with reduced late fees.
• Annual Return Filing – The Council has recommended amending the CGST Act 2017. It allows for self-certification of reconciliation statements, instead of getting them certified by Chartered Accountants.
• The Council exempts import duty on Covid-19 relief materials- The GST Council extends the GST exemption granted on relief material received for free from abroad for donations to State-approved entities.
o The period for availing of this exemption has also been extended to August 31.
o The medicine for Black Fungus [Amphotericin-B] has also been included in the exemption list for tax-free imports.
• GST Compensation Cess to remain the same – Same formula as last year will be adopted in 2021 too. A rough estimate is that the Central Government will have to borrow Rs. 1.58 lakh crores and pass it on to the states.
• There were no discussions on putting fuel- petrol, diesel under GST, despite high petrol prices.
• The Council failed to provide an immediate tax break for critical pandemic relief supplies despite States and industry pressing for waivers.
• Inadequate relaxation in GST amnesty scheme – There is no waiver from interest payment available to businesses with a turnover of over ₹5 crores. 
The catchy phrase ‘cooperative federalism’ was introduced into India’s political lexicon to justify the transition to GST in 2017. 
Sadly, like other catchy phrases such as ‘Minimum government, maximum governance’ and ‘Make in India’, this too has turned out to be hollow.
Cooperative federalism has a larger meaning beyond just fiscal federalism. It also entails cooperative political, administrative and governance federalism between the States and the Centre. 
1. Article 279A: GST Council to be formed by the President to administer & govern GST.
2. It’s Chairman is Union Finance Minister of India with ministers nominated by the state governments as its members.
3. The council is devised in such a way that the centre will have 1/3rd voting power and the states have 2/3rd. The decisions are taken by 3/4th majority.
4. Under the GST (Compensation to States) Act, 2017, states are guaranteed compensation for loss of revenue on account of implementation of GST for a transition period of five years between 2017 and 22.
5. The compensation is calculated based on the difference between the states current GST revenue and the protected revenue after estimating an annualised 14% growth rate from the base year of 2015-16.
• It would be beneficial, if all businesses were given a complete waiver of late fees for pandemic hit months.
• Waiting until June 8 for a final decision on extra GST exemptions for COVID relief operations are waste of time, when each day’s delay in providing relief hurts thousands. 
Thus, GST is a positive step towards shifting Indian economy from the informal to formal economy.
It is important to utilise experiences from global economies that have implemented GST before us, to overcome the impending challenges.

QUESTION : Discuss the issues associated with the administration of UTs in India and effective measures to be taken to overcome these issues . 

Issues Associated With Lakshadweep
The article highlights the issues with development model sought to be pursued in Lakshadweep. 
• A specially constituted Island Development Authority (IDA) for the island territories of India, chaired by no less than the former Prime Minister, Rajiv Gandhi.
• IDA had in 1988, approved a framework for the development of India’s island territories. 
• IDA sought an environmentally sound strategy for both island groups hinges on better exploitation of marine resources coupled with much greater care in the use of land resources.
• Deliberations of the IDA wanted that Lakshadweep, with its land ownership constitutionally protected, be opened to international tourism. 
o Constitution of Lakshadweep Development Authority: 
• It empowers the government, identified as the administrator, to constitute Planning and Development Authorities under it to plan the development of any area identified as having “bad layout or obsolete development”. 
• The authority would be a body corporate with a government-appointed chairman, a town planning officer and three ‘expert’ government nominees besides two local authority representatives.
• These authorities are to prepare land use maps, carry out zonation for type of land use and indicate areas for proposed national highways, arterial roads, ring roads, major streets, railways, tramways, airports, theatres, museums etc.
• Only cantonment areas are exempted from this.
o Defines ‘Development’: 
• It defines development as the carrying out of building, engineering, mining, quarrying or other operations in, on, over or under land, the cutting of a hill or any portion thereof or the making of any material change in any building or land or in the use of any building or land. 
o Fees for Changing Zones: 
• It stipulates that islanders must pay a processing fee for zone changes.
• It implies that localities would be required to pay fees to gain approval to alter zones as per the development plan, as well as fees for permission to develop their own land. 
o Penalties: 
• It establishes penalties such as imprisonment for obstructing the development plan’s work or workers.
o Real Estate Interests: 
• People suspect that this might have been issued at the behest of ‘real estate interests’ seeking to usurp the small holdings of property owned by the islanders, a majority of them (94.8% as per the 2011 Census) belonging to the Scheduled Tribes (STs)
• Proposals to bring real estate development concepts such as ‘transferable development rights’ to the island have raised people’s fear of forced migration en masse.
o Forcible Relocation & Eviction: 
• It vests such powers with the authority that it can prepare comprehensive development plans for any area and relocate people regardless of their will.
• It provides for forcible eviction, puts the onus on the owner to develop his holding as per the plan prepared by the authority as also to heavily penalise them in the event of non-compliance. 
o Destruction of Culture: 
• The island community is a close-knit group with families living in close proximity. The regulation will destroy the way of life practised by them for generations. 
o Ecological Concerns: 
• It is neither ecologically sustainable nor socially viable and the people’s representatives were not consulted before drafting it. 
What Lakshadweep needs is a clear policy must include conservation and natural resource management arrived at after wide consultation, eminently possible within the existing infrastructure of the Union Territory, and also taking into account climatic compulsions.

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