New Delhi: Leaders of the Congress party and its nine chief ministers on Tuesday opposed the Constitutional amendment bill to roll out the Goods and Services Tax (GST), saying the bill in its present form had several “shortcomings".

Congress president Sonia Gandhi called a meeting to form a united stand on several policy decisions of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government, including GST, land bill, food security bill and the forests rights Act.

A party resolution, which blamed the BJP for blocking the GST proposal when the Congress-led United Progressive Alliance (UPA) introduced the legislation in March 2011, said “the present Constitution (122nd Amendment) Bill to allow for GST has several shortcomings that need to be addressed before it finally becomes law".

The tough stance spells trouble for the NDA, which needs the cooperation of opposition parties, including the Congress, in the Rajya Sabha and consent of half the state legislatures to enact the landmark reform.

Senior party leaders including former prime minister Manmohan Singh, former rural development minister Jairam Ramesh and Karnataka chief minister K. Siddaramaiah expressed their concerns. “We made every effort to make GST a reality, but we were up against an obstructionist BJP. Now, BJP has become the greatest champion of GST... I am not sure that the law we are presently considering is the best route forward," Singh said at the meeting.

“Congress chief ministers are in favour of GST, but the current law has a lot of deficiencies. We want the GST bill to be improved and so it has gone to the select committee. It cannot go in the current form," Ramesh told reporters at the end of the meeting.

Siddaramaiah said subsuming the entry tax in entirety under GST was a cause of concern for Karnataka.

The current version of the GST bill has some key differences from the version introduced by the UPA. While some changes, such as the promise of compensating states for five years for GST losses, are considered positive, a proposed additional 1% tax on supply of goods is seen as a major distortion of GST.

Many states have opposed the 1% levy on supply of goods, arguing this will distort GST as it will have a cascading impact on prices. This was included in the bill at the insistence of manufacturing states such as BJP-ruled Gujarat.

Both Sonia Gandhi and Congress vice-president Rahul Gandhi claimed the NDA government was trying to dismantle the “welfare state" created by past Congress-led governments.

“In terms of substance, there are systematic attempts being made to dismantle the edifice of the welfare state built up over the decades by successive Congress governments, a state which promoted economic growth for the betterment of everybody but especially to meet the objectives of social justice and equity," Sonia Gandhi said.

Later in the day, finance minister Arun Jaitley rebutted claims that Congress-ruled states are being discriminated against.

GST aims to foster a common national market by removing barriers across states and facilitating smooth movement of goods.

But businesses fear an imperfect GST could increase compliance and input costs.

Sonia Gandhi, Rahul Gandhi, Singh and other senior leaders addressed the meeting, attended by chief ministers of all nine Congress-ruled states—Himachal Pradesh, Karnataka, Uttarakhand, Kerala, Arunachal Pradesh, Assam, Manipur, Meghalaya and Mizoram.

The Congress president told the chief ministers that their immediate focus should be on the manner in which flagship UPA programmes were being implemented, dilution of the UPA’s pro-poor policies and how Congress-led states would implement new schemes brought in by NDA. She also told the state heads that “communications and marketing skills" need to be improved ahead of upcoming polls in states such as Assam and Kerala.

“We must defend our rights-based paradigm and defend our efforts towards decentralization. We should showcase that the nine Congress states are the best-run states in the country," Rahul Gandhi told the meeting.

The leaders also decided that Congress-ruled states will pass state-level legislation to give statutory status to the Scheduled Caste Sub-Plan and the Tribal Sub-Plan. The five chief ministers from the north-eastern states demanded that the Union government should work with them on all matters of “internal security, foreign policy and on tackling problems arising out of porous international borders".

Union finance minister Jaitley said tax devolution in the next five years will be far more than in the previous five years, refuting the claim that the Congress-ruled states are being discriminated against. “Further amounts will also be allotted to states for centrally supported projects of the railways and the National Highways. A special provision would also be made for Uttarakhand on account of the restoration of the flood affected areas and the Ardh Kumbh," Jaitley said in an official release.

Remya Nair contributed to this story.

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