Ghadai to write to union finance minister on GST

With the Empowered Committee on state finance ministers dealing a blow to Orissa's key demand of keeping coal royalty out of the purview of the proposed Goods & Service Tax (GST), the state government has now decided to knock the doors of the Union finance ministry to get its demand fulfilled.

The state finance minister Prafulla Chandra Ghadai will soon write to the Union finance minister Pranab Mukherjee on the matter.

"We had time and again brought to the notice of the empowered committee that coal should be kept out of GST's purview. Our other demands include keeping entry tax out of GST's ambit and settlement of disputes pertaining to GST by the GST Council itself instead of referring them to a Dispute Settlement Authority chaired by a retired judge of the Supreme Court. As the deadlock still persists within the empowered committee relating to the demands, it has been decided that the state finance minister will seek the intervention of the Union finance minister on the matter”, said a senior official of the state finance department.

Orissa has argued that since natural gas which was included in the VAT (Value Added Tax) list, has been kept out of GST on the ground that it is used for generation of power, Orissa had argued that coal also must be kept out of GST. The state had pointed out that GST on coal would have a direct effect on power cost.

Currently four per cent VAT is levied on coal. If it is included in the GST list, the effective rate would be 12 per cent as both state GST and Central GST would collect 6 per cent levy each on coal.

Moreover, the state had also demanded that the entry tax be kept out of GST's ambit.

The state government had categorically stated that it would not roll out GST if the entry tax is not kept out of its purview. Every year, the state government earns around Rs 800 crore by way of entry tax and it was not in favour of the entry tax being subsumed under GST.The empowered committee is yet to reach a consensus on the mechanism of settlement of disputes pertaining to GST. It has been suggested by the Empowered Committee that a Dispute Settlement Authority chaired by a retired judge of the Supreme Court of India needs to be created for settlement of disputes. The Orissa government had suggested that this can be resolved by the GST Council itself.