The government on Wednesday gave up plans to reconvene a session of Parliament to get GST Constitutional Amendment Bill approved, a move that is likely to delay the implementation of Goods and Services Tax by April 1, 2016.
The Cabinet Committee on Political Affairs (CCPA) headed by Prime Minister Narendra Modi decided to recommend to the President to prorogue the Monsoon Session, which was adjourned last month, Finance Minister Arun Jaitley said on Wednesday.
The government had kept the Monsoon Session alive in hopes of building a consensus on GST, which has been billed as one of the biggest economic reform.
But the Opposition Congress refused to cooperate unless its demands for action against External Affairs Minister Sushma Swaraj and chief ministers of Rajasthan and Madhya Pradesh for alleged irregularities were met.
The government was keen on a special session to obtain Parliament's nod for the constitution amendment bill on the Goods and Services Tax (GST) but opted against it "for the time being" as talks with Congress did not yield results, Jaitley said.
He said efforts to reach an agreement on the GST Bill would continue.
"We will keep trying. We are in contact with all political parties. And nearly all parties except Congress are in favour of this bill. In Lok Sabha, except Congress all political parties had voted in favour of the bill. Congress had walked out, they (other parties) had not walked out. If situation changes then Cabinet will again reconsider the matter," he added.
The next Parliament session is expected in November.
On doubts over GST missing the April 1, 2016 target, he said, "Your guess is as good as mine."
Earlier in the day, at an event organised by The Economist magazine, Jaitley had warned of GST getting delayed by "sometime" because of Congress obstructions.
He said if the number of parties which supported the GST Bill in Lok Sabha are tallied, the government had "two-third" majority support in Rajya Sabha as well.
"The Congress Party says -- I will only shout down... I would like to see it being implemented by April 1, but if this kind of obstructionism remains, perhaps the Congress party will succeed in hurting Indian economy and derail the GST for sometime. But now GST is almost a fortified agenda. The objections being raised, I don't see much substance in them. So I don't see much time before this is passed," he said at the summit.
Congress had on Tuesday virtually red-flagged government's attempts to call a Special Session of Parliament, telling it bluntly such an exercise would serve no purpose unless action was taken against External Affairs Minister Sushma Swaraj and chief ministers of Rajasthan, Madhya Pradesh and Chhattisgarh.
The Constitution Amendment Bill for rollout of GST has been passed in Lok Sabha, but is yet to be approved by Rajya Sabha where the ruling BJP does not enjoy majority of its own.
The Finance Minister also said the composition of Upper House would change after the next bi-annual election in April in favour of the ruling alliance.
As of now, Congress has maximum members in Rajya Sabha.
The government plans to roll out GST, which seeks to replace all indirect taxes with a uniform levy, by April 1, 2016. GST is estimated to boost India's GDP by 1-2 per cent.
After passage by Rajya Sabha, the constitution amendment bill on GST will have to be approved by 50 per cent of the state legislatures.
Jaitley said once the bill is approved by Rajya Sabha, the other steps would not take much time as the government is ready with supporting legislations, of which one has to be passed by Centre and two by states.
"Our draft legislations are almost ready. We will require meeting of empowered committee to clear them and they can be passed. We need the IT backbone, and those handling the IT infrastructure inform us they are in position to put it in place by April 1, 2016 comfortably... we are keeping ourself in readiness," Jaitley said.
Accusing Congress of delaying the GST, he said, "The only veto is right to disturb the Rajya Sabha so that the Chairman can adjourn it."
He further said Congress had raised certain demands, which were not there in the GST Bill prepared by the UPA's Finance Minister in 2011.
Jaitley said it was not possible for the government to put a cap of 18 per cent on the GST rate in the constitution bill, as was being suggested by Congress.
It is for the proposed GST council to decided the tax rates, he said, adding "suppose tomorrow states agree and alcohol comes under GST then should medicine and alcohol be taxed at same rate. This wisdom has dawned on Congress party only after it lost power!" the minister.