States against inclusion of liquor, petrol in GST

SHILLONG, NOV 18: The  states have opposed the move of the union government to bring liquor and petroleum products under the Goods and Services Tax (GST) saying these items are their major sources of revenue.

The reservation to the intention of the union government emerged during the discussion at the meeting of the “Empowered Committee of State Finance Ministers” in Shillong Monday. Over twenty-five states from across the country including Haryana, Bihar, Tamil Nadu, Uttar Pradesh, Uttarakhand, Himachal Pradesh, Punjab, Rajasthan, Karnataka, Maharashthra, Assam, Nagaland Manipur, Tripura, and others took part in the meeting.

In the revised draft of the bill circulated to the states, the centre has proposed inclusion of petroleum and liquor under GST.

The committee’s chairman AR Rather, who is also the finance minister of Jammu & Kashmir, said,  “They states have expressed their keenness to retain power to tax these items (liquor and petroleum) as these are major sources of revenue.”

Briefing reporters after the meeting Rather said that while taking their views into considerations, the Empowered Committee has agreed in unanimity that these items should kept out of the GST. He said if these items are subsumed, the states felt that they are going lose their revenue generation.

The meeting further agreed that compensation should be paid to the states that will lose revenue on account of introduction of GST in their states.

“A provision should be made in the constitution itself that there should be some independent mechanism to pay the compensation to the states who will face loses by introducing this GST in their states,” Rather informed.

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.

According to Rather, basically in the original draft of the union government, it was stated that anti-tax in levy of petrol should not be subsume but in the revised draft there was a proposal that it should be subsume.

In order to protect the revenue interest of local bodies, Rather said  the committee felt that the provision existed in the original draft should incorporated in the revised draft also.”

Stating that union government has proposed that entry 92 D (regarding GST) should be incorporated in the union list that there should be mentioning in the Union List of GST and 54 A entry should be there also about GST, Rather said, “But the committee felt that these incorporation are not needed at all because the proposed article 426 A of the amendment bill gives powers to the union government  as also the states to introduce GST so there is no need to have these provisions in the union list and state list”

Rather said that all the recommendations agreed in unanimity would be soon submitted to the union government for its examination.- By Our Reporter