Several states today opposed inclusion of petroleum products and liquor in the proposed Goods and Services Tax (GST) regime as the move would severely affect their revenues. This came out at the meeting of the Empowered Committee of State Finance Finance Ministers that deliberated the revised draft of the Constitutional Amendment Bill for introduction of new indirect tax regime, among other things. Some states also expressed their reservation to inclusion of ‘entry tax’ in the GST fold.
While the centre wants liquor and petroleum products should come under the GST, states are keen to retain their power to tax these items as they are major sources of revenue. “Most of the states…majority of the states have opposed bringing petroleum products and liquor in GST framework. They want to keep (the two items) out of GST,” Empowered Committee Chairman and Jammu & Kashmir Finance Minister A R Rather told reporters after the meeting. He did not provide names of states opposing the move.
Only 10-12 state Finance Ministers, he said, could present their views due to “paucity of time” and the remaining states would get chance in the next meeting scheduled in the around November 15. “Empowered Committee has not completed its discussion on the revised Bill. We will try to conclude the discussion in the next meeting,” Rather added. In the revised draft of the Bill circulated to the states on September 18, the Centre had proposed inclusion of petroleum and liquor under GST. When asked by when the new indirect tax regime is likely to come into force, Rather said he could give any timeline. “…for passing a Constitution Amendment Bill you need two-third majority. You know under the present circumstances to get two-third majority is a herculean task for the government,” he said.
The revised Constitutional Amendment draft incorporates the views of the Parliamentary Standing Committee which had suggested minimum exclusion to ensure an integrated, comprehensive and seamless GST regime. The issues of petroleum products and liquor have already been deliberated upon by a sub-committee of officials which was set up to study the recommendations of Parliamentary Standing Committee and the revised draft of the Constitutional Amendment Bill, and suggest ways for reconciling different positions.
Rather further said in line with the suggestion of the North-eastern states, the next meeting of EC is likely to be held in Meghalaya. Roll-out of GST, which will empower the Centre and states to simultaneously tax supply of goods and services, had missed several deadlines due to differences between states and the Centre over contentious issue of CST compensation and design of the GST structure.
The Constitution Amendment Bill was introduced in Parliament in 2010. The government hopes that it will be taken up for discussion in the Winter session.