For the rest of India, the GST (Goods and Services Tax) is just a tax law, but in the Kashmir Valley, the innocuous acronym is more about politics than economics. To most people here, it is yet another attempt to dilute Jammu and Kashmir’s autonomy under Article 370 – this time it will be the state’s fiscal autonomy.

Though J&K coalition government went ahead and recommended its extension to the President, who promptly issued the ordinance to apply the law to the state, it didn’t end the deep public misgivings about it. On July 5, when J&K Assembly passed the resolution in favour of GST, Kashmir was observing a shutdown against it. The state government arrested dozens of business leaders to prevent them from holding a protest. Separatists opposed it too, so did the major opposition parties including the National Conference and the Congress.For J&K, the development is wrought with profound political and practical fallout. Political because people believe it downgrades the already hollowed autonomy under Article 370. And in practical terms, it snatches the J&K Government’s exclusive authority to levy and collect taxes.

For J&K, the development is wrought with profound political and practical fallout. Political because people believe it downgrades the already hollowed autonomy under Article 370. And in practical terms, it snatches the J&K Government’s exclusive authority to levy and collect taxes.

While J&K draws its taxation powers under Section 5 of its own Constitution, other states derive it from Article 42 of the Indian Constitution. But now the extension of GST is expected to fundamentally alter this scheme and transfer these powers to the all-powerful GST Council.

More significantly, an extension of yet another Constitutional Application Order evokes in Kashmir the memory of 46 such orders from 1953 to 1988 which reduced the Article 370 to a little more than husk. Fewer provisions are left that still lend strength to this Article, among them the bar on outsiders to get J&K citizenship or buy property in the state under Article 35A. The fiscal autonomy under Section 5 of the J&K Constitution is also one of them.  Under the section, J&K has the power to tax both goods and services.  And with the presidential order, the state is alleged to have lost it too. The ordinance, claim its baiters – and also the supporters such as the BJP – has achieved J&K’s economic integration with the Indian Union.  Or has it?

At least, this is what Finance Minister Arun Jaitley pointed out in his speech on the occasion of the birth anniversary of the Jana Sangh founder Syama Prasad Mookerjee.

“Mookerjee had started a campaign for complete integration of J&K in India. Another big move in this direction started yesterday when J&K assembly passed a resolution to adopt GST. It has political significance,” Jaitley said. The move had accomplished something “which couldn’t be done in 70 years,” he said.

The BJP’s Kashmir spokesman Khalid Jahangir told Newslaundry as much: “We are already a part of India. And GST is one more step in the direction of integrating J&K into India”.

One of the BJP’s legislators, however, called the cabinet’s recommendation as “a big slap in the face of the separatists”.

“The GST is a step and beginning of the process of complete integration of Jammu and Kashmir into the Union of India,” the BJP state president and MLA Sat Sharma said.

Similarly, GST’s opponents in the Valley which span business groups and opposition parties like the NC and the Congress agree with the BJP’s conclusion. NC leader and former Chief Minister Omar Abdullah termed the cabinet’s recommendation to the president to extend the GST to J&K as “a blank cheque”.

Engineer Rashid, the independent legislator told Newslaundry, the law was not only tantamount to “the economic integration of Kashmir with the rest of India but also a step towards complete integration”.

But the PDP, on its part, insists that the government has recommended the incorporation of the necessary safeguards in law to save the state’s fiscal autonomy, one of the last and the less attractive holdovers of the autonomy under Article 370 whereby J&K once enjoyed the freedom of operation in all matters of governance except defence, foreign affairs and communications.

Soon after President Pranab Mukherjee issued the ordinance, the PDP spun it as a political victory just as Jaitley claimed it as the BJP’s triumph. State finance minister Dr Haseeb Drabu held a press conference in Srinagar, asserting the ordinance was protective of J&K’s special status and, therefore, unlike the ordinances of the past which had nibbled away at the provisions of the Article 370.

“The frenzy was created by the civil society, opposition and others said implementation of the GST will lead to erosion of autonomy and Article 370 and dilution of state’s fiscal autonomy. I kept on saying and even hinted at times that we will ensure adequate safeguards. Today, the Presidential Order on GST for J&K explains everything…we have ensured constitutional and legislative safeguards as promised by the government,” he told the media. “There cannot be a clearer articulation of safeguards and protection for the existing constitutional position of Jammu and Kashmir.”

Reading from the presidential order, Drabu said, “The powers of Jammu and Kashmir as per Section 5 of the State Constitution shall remain intact…the legislature of the state shall have exclusive powers to make laws in respect of imposition of any taxes as enabled by Section 5 of the Constitution of Jammu and Kashmir”.

He said GST had no “overriding powers” with regard to J&K. “If the GST Council goes to Parliament and wants to make changes, no such amendment shall have effect in respect of Jammu and Kashmir unless applied by the order of the President under clause 1 of Article 370. This takes care of Article 370,” Drabu said.

Senior minister and J&K Government spokesman Naeem Akhtar was also gung-ho about the development. He told Newslaundry that the ordinance was the “first unambiguous political reiteration by the state of India about J&K’s special status”.

“They have mentioned it in a presidential ordinance. It can create space for a political resolution if this goes on like this. This is a good beginning,” he said. “It is essentially a confidence building measure. It is a reaffirmation that the Centre is alive to the sensitivities of the people of Kashmir”.

Akhtar said the taxes will be imposed but J&K’s legislative powers will remain unaffected. “We can still have our tax regime in our state beyond GST. Importantly, they have made GST Council subservient to the state. The state will have a veto over the Council’s decision regarding J&K. And it will also be done through the same procedure which is provided in Article 370. They will have to go through the presidential route again on any further action regarding J&K,” Akhtar said. “We should acknowledge this so that we get more. This is the beginning of the creation of the new political space through an institutional mechanism and through democratic means within the space provided by the Indian Constitution.”

Business leaders in the Valley aren’t ready to take the ordinance at face value. Noted businessman and former president of the Kashmir Chambers of Commerce Shakeel Qalander said: “Going by the nature of the GST regime,  underpinned as it is by ‘one nation, one tax’ philosophy, it is very unlikely that the state will remain in a position to hold its own on tax policies in the state. And that is a loss of autonomy, not gain.”

On the other hand, former J&K High Court judge Justice Hasnain Masoodi said the ordinance needs closer examination to understand its impact on the ground.

“It is a misnomer to say that the Article 370 has remained unaffected. It will continue to remain in place. But the devil lies in the details. The issue is the provisions that make the Article operational are diluted one after another,” Masoodi told Newslaundry.   “Some things are only of cosmetic nature. They make for a positive reading but actually don’t add up to anything.”

The opposition National Conference termed the Presidential ordinance further erosion of Article 370, saying the order should have mentioned that GST Council has no taxation powers for the state. “The power of the GST Council and the Parliament to levy taxes to Jammu and Kashmir have been extended to the state as is mentioned in the Presidential Order under Article 279- A,” NC leader and former finance minister Abdur Rahim Rather said.

So the jury is not yet out on the latest extension of the central law to Kashmir. While the BJP tom-toms its role in achieving financial integration of J&K into the Indian Union, the PDP congratulates itself for strengthening Kashmir’s autonomy. The truth lies somewhere in between.

The author can be contacted on Twitter @waniriyaz.

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