Deputy chief minister Sushil Kumar Modi with (right) Union finance minister Pranab Mukherjee and other state finance ministers after Modi was elected GST chairman, at Vigyan Bhavan in New Delhi on Monday. (PTI)

July 18: Bihar deputy chief minister Sushil Kumar Modi was today unanimously elected the chairman of the goods and services tax (GST) panel.

Modi, initially reluctant to accept the offer from the Union finance minister, Pranab Mukherjee, replaces Asim Dasgupta, who headed the empowered committee for over a decade and oversaw implementation of the value-added tax regime. Dasgupta, the former Bengal finance minister, had to step down after the Left Front was voted out in the recent Assembly elections.

While it is expected that a finance minister from one of the BJP-ruled states heading the empowered committee might help build consensus between the Congress and the Opposition on the proposed GST regime, it is not an absolute certainty, said officials. “Much would depend on politics,” one among them said.

The next meeting of the empowered group has been fixed for the second half of August.

The BJP-ruled states and the BSP-ruled Uttar Pradesh have opposed the Constitution Amendment Bill, introduced by the Centre to pave the way for the implementation of GST regime, stating that its provisions would curtail their power to levy taxes.

The bill would need the approval of two-thirds of Parliament and half of India’s 28 states to become a law. Therefore, the support of the BJP is crucial at the state- and the central-level.

The finance ministers of different states are optimistic that the new leadership would ensure faster implementation of the indirect tax regime, which is expected to subsume excise duty and service tax at the central-level and VAT on the state front, besides local levies.

“We are all very positive that under the leadership of Modi all the issues which have been pending between the Centre and the states, all the issues related to VAT and GST, will be amicably solved,” said Gujarat finance minister Saurabhbhai Patel.

The BJP, which had been steadfastly sabotaging Mukherjee’s attempts to bring in a nationwide GST, had earlier this year seemed to relent with the party chief Nitin Gadkari stating he was in favour of the GST “in principle”.

Corporate lobbying seemed to have succeeded where the ruling Congress’s attempts to bring the BJP on board did not. Industrialists from states like Gujarat, Madhya Pradesh, Karnataka and Maharashtra, who have close links with the main opposition party, seem to have convinced the BJP that producer states like Gujarat and Karnataka would gain the most if GST is introduced.

Gadkari, perhaps in deference to steadfast opposition to the tax measure by party strongman and Gujarat Chief Minister Narendra Modi, had tempered his support by voicing concerns on the disbursement of states’ share from the tax kitty.