The fitment panel, comprising state and central officials, examines representations from industries and states for rate reductions. These recommendations are then put up to the GST
Council for a final decision.
government had sought retrospective exemption from integrated GST
(IGST). If allowed, the state government could get back Rs 95 lakh IGST that it had already paid.
At the time of import, the BMW
vehicle enjoyed basic customs duty exemption, allowed as part of a governor’s allowances and privileges. However, no such exemption was allowed in the case of IGST by the GST Council.
The matter was clarified to the Gujarat government at the time of import itself, an official pointed out.
The fitment panel had also rejected any rate cut for the auto sector, suggesting that the move would not only entail a huge revenue implication, but also that the slowdown could be attributed to a host of other structural and cyclical factors.
The panel pointed out that liquidity crunch, the NBFC crisis, regulatory changes like axle load increase, emission standard change from BS-IV to BS-VI and efficiency gains due to GST implementation could also explain the motown’s demand slowdown. It further added that reduction in rates on motor vehicles may not necessarily mean the same for auto parts and components.
Despite a push from Road and Transport Minister Nitin Gadkari, the fitment committee turned down the request for a rate cut on hybrid vehicles, saying that they already had a tax advantage of 5 per cent over a normal large-segment internal combustion engine vehicle.
What's the case
Gujarat govt imported a BMW high-security car, worth Rs 2 crore, for use by the governor
State govt later sought retrospective exemption from integrated GST
Fitment panel clarified no retrospective exemption could be given for the car, arguing specific exceptions would create distortion
GST Council upheld the panel’s recommendation
If allowed, state govt could have got back Rs 95 lakh IGST