GST Council meet today to try and bridge differences

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A fortnight ahead of the start of the Budget session of Parliament, the goods and services tax (GST) Council will on Monday try to find the resolution to issue of administrative turf between the Centre and states, as well as definition of coastal states.

Sources said shortage of time due to the coming elections in five states could come in the way of finding an early solution.

Andhra Pradesh Finance Minister Yanamala Ramakrishnudu hoped a solution to both issues might be found out at the meeting. He will not attend the meeting but will send an officer to represent the state as he is going to attend the World Economic Forum in Davos.

Uttarakhand’s Indira Hridayesh told Business Standard some solution to the administrative turf issue has to be found in consensus to implement the GST. But the Centre is not agreeing to states’ demand to give them sole control over assessees up to Rs 1.5 crore of annual turnover.

It is almost clear that GST would not be introduced from April 1. Industry needs clarity on the rules at least three-four months in advance.

GST has to be implemented by September 16, as the Centre and the states would lose their right to impose taxes after that. The focus in on whether the GST can be implemented by July, if not April.

The administrative control over assessees, known as dual control in popular parlance, has divided the Centre and the states for some time.

States have been demanding sole control over those with up to Rs 1.5 crore of turnover. The Centre wants cross-empowerment — control of both the Centre and states over assessees in a pre-determined ratio. 

"We want sole control over assessees; up to Rs 1.5 crore of turnover, but the Centre is not ready. It wants to control certain proportion with itself," Hridayesh said. She said the Centre and states would sit together and have to find a solution to this vexed issue.

Ramakrishunudu said he hoped this issue is resolved at the meeting on Monday.

On whether the Centre has offered any alternative on dual control, some state finance ministers said neither the Centre nor states had time due to the coming elections in Uttar Pradesh, Punjab, Goa, Uttarakhand and Manipur. 

After the previous Council meeting, Finance Minister Arun Jaitley had said, "Dual control is a complex issue. We have not found a solution. The discussion was inconclusive." He had said the Council was not deliberately resorting to voting, as this would set a precedent.

Ramakrishnudu said Andhra Pradesh’s stand on the issue of definition of coastal states was intact. While the Centre wants to take 12 nautical miles beyond coasts as Union Territory and tax any item sold there, coastal states are averse to this as they levy tax on these.

"We want status quo (states should have control over 12 nautical miles)," he said. He said about Rs 600 crore a year was realised by the state on the sales of bunker to foreign going vessels and on gas explored in territorial waters.

After the previous meeting earlier this month, Jaitley had said the Constitution states what is not a part of scheduled state is Union Territory. This issue has been pending in the courts also and is currently before the Supreme Court. 

The case of states, Jaitley said, was that they should be allowed to levy taxes. Jaitley said a constitutional solution to this vexed issue has to be found. The issue is also sub-judice at present.

Despite being an unrelated issue, demonetisation has also irked some states, particularly West Bengal, and such states are demanding higher compensation, estimated at Rs 55,000, for revenue-losing states a year.

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