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Taxing time for states

Bhubaneswar, Jan. 29: The Empowered Committee of Finance Ministers today resolved to prevent the Centre from infringing on their rights by creating a quasi-judicial body called Dispute Settlement Authority to resolve contentious issues involving the Goods and Service (GST) tax.

It said all such disputes should be resolved by taking the states into confidence.

The committee, whose two-day meeting concluded here today, also set up three sub-committees to deliberate on various contentions issues related to the GST, which aims to phase out all forms of taxes and envisages a comprehensive tax levied on manufacture, sale and consumption of goods and service at national level. The sub-committees, consisting of officials both from the Centre as well states, will be asked to submit their reports within three months.

At present, the standing committee of Parliament is scrutinising the GST bill. The panel will send its recommendation to the Centre, which will forward it to the Standing Committee.

The empowered committee chairperson and deputy chief minister of Bihar Sushil Kumar Modi said: “The Centre’s Bill on the GST envisages a council, which would be a constitutional body headed by the Union finance minister. Finance ministers of all states would be represented on it. But, if we allow the Centre to constitute another body at parallel to the GST council for dispute resolution, this may lead to Delhi’s intervention in the matters of states infringing their rights. The GST council should itself find a mechanism to settle the contentious issues with the consents of states.”

Modi said the committee would urge the Centre not to pressurise states to come under the GST fold.

“It should be optional on the part of states whether to join the GST club. A mechanism will shortly be worked out for sharing of taxes with the Centre of those states not willing to join the GST club.”

The panel has decided to set up a sub-committee to look into the issue of the Integrated Goods and Service Tax (IGST) and come up with a solution on rationalising taxes. The committee will also look into the issue of revenue neutral rates (RNR), which aims to ensure that all the states and the Centre get a normal revenue and don’t suffer on account of implementation of the GST.

The mineral-rich states today urged the panel that they should be allowed to impose a certain percentage of their extracted mineral wealth as cess, which should not come under the GST.

Odisha finance minister Prasanna Kumar Acharya said: “As a mineral bearing state, we are facing all kinds of pollution. The Centre should allow us to impose the green cess on the minerals, which should not be included in the GST.”

Responding to the demands of the mineral-bearing states, Modi said: “We have taken note of it. We will try to ensure that there is flexibility in the GST. The states will be allowed to impose a cess on their minerals, and for this, a framework will be prepared. We will recommend this to the Centre.”

Modi also argued in favour of small traders being kept out of the dual authority, which the GST was likely to create. “The small traders may have to report both to the tax officials of the Centre as well as the state. To avoid their harassment we have set up a sub-committee, which will look into the issue.”

As many as 13 finance ministers attended the two-day conference. Other states were represented by their officials.