Uncertainty In The Gst Continues

By Author: Sanjay Chauhan
Total Articles: 2
Comment this article

There is no doubt that our Government is trying hard to implement the Goods and Services Tax as early as possible but the areas of differences between the State Governments and Centre are such that the rolling out of the GST will definitely consumes a lot of time. Earlier when the Finance Minister proposed the rates for the Goods and Services Tax, a consensus was almost formed among all the states in connection with those rates. But the proposal to give the Veto Power to the Union Finance Minister suddenly changes all the momentum and thereafter all are going wrong for the future of the Goods and Services Tax.

The most quarrelsome issue between the State Governments and the Centre is of ‘Constitutional Amendment'. Constitutional Amendment Bill is required to give powers to states to levy Service Tax and the Centre to impose tax beyond the production stage. Currently, the Centre can impose tax on goods at the factory gate and services while states can impose tax at the retail level on goods. Meanwhile to put an end to this contentious issue, earlier Gujarat Government came up with an alternative GST model. Gujarat ...
... has suggested that the states be allowed to collect both Central GST and States GST and then transfer the Centre's share after deducting their compensation amount. But the Centre straightaway rejected that model on the grounds that it will challenge the basic structure of the Constitution, under which funds are to flow from the Union Government to the States.

Other areas that can still occur as a hurdle in the building of the Consensus would be Article 279A and Article 279B of the Constitutional Amendment Draft. Article 279A deals with the formation of a GST council, headed by the Union Finance Minister whereas Article 279B deals with the setting up of a Dispute Settlement Authority. The States are demanding that they should be individually allowed to make laws on the creation of such a body, instead of the Centre setting it up through an amendment to the Constitution.

Recently, State governments have suggested an alternative to the Central Government on the proposed Constitutional Amendment for introduction of a Goods and Services Tax (GST). They are basically looking for a sub-committee under the proposed GST Council or the Empowered Committee of State Finance Ministers to resolve any disputes in the tax's implementation. In a letter to Union finance minister Pranab Mukherjee, Empowered Committee of State Finance Ministers Chairman and West Bengal finance minister, Asim Dasgupta, said on the basis of the working of the GST Council and the sub-committee, the Centre could consider a Constitutional Amendment for creating a GST Disputes Settlement Authority, if required, at a later point in time.

A recent statement from Mr. Dasgupta suggests that the States concerns are basically for retaining and uploading fiscal autonomy. They also want to retain some flexibility in the system so that if there is any urgent need, states will have to take recourse to additional tax measures. In other words, they are of the view that the States Legislature should be given primacy.

Let's see now what our Finance Minister Mr. Pranab Mukherjee have to say about this new suggestion.

Get The Daily Updates On GST, Visit: http://www.lawcrux.org or contact us on our email id: services@lawcrux.com or phone no: +91.1294086390.