Now, Centre rejects states' GST model

After the states rejected two drafts prepared by the Centre on a Constitutional amendment for the rollout of Goods and Services Tax (GST), it was the finance ministry’s turn to reject the model proposed by states. The Union government has turned down states’ alternative model which suggested that states should be allowed to tax services without amending the Constitution.

Revenue Secretary Sunil Mitra told reporters on the sidelines of a CII seminar that the Union government was not able to accept the suggestions of Madhya Pradesh, Gujarat or the chairman of the empowered committee because these did not allow the essential features of GST to operate.

In the last meeting of the empowered committee on September 20, Madhya Pradesh had proposed an alternative model that would not require any amendment to the Constitution for introducing GST. Gujarat had also said it would give an alternative model. Other states had asked for some time to study the Madhya Pradesh model. Empowered Committee Chairman and West Bengal Finance Minister Asim Dasgupta had also suggested a similar model in a letter to Finance Minister Pranab Mukherjee last month.

“We will not take it (GST) forward without Constitutional amendment,” Mitra said, and added the government had communicated its decision to the empowered committee.

The next meeting of the committee is scheduled to take place in Goa on October 27. If consensus is reached on the Bill proposed by the Centre in that meeting, the legislation could be tabled in the winter session of Parliament.

“Only then, I can take the legislation to winter session and, though it will be a setback of a few months, it can become operational from mid-next year,” Mitra said.

The first draft floated by the Centre on Constitutional amendment for GST was rejected by states, mainly on the ground that it was giving veto power to the Union finance minister. The Centre dropped the proposal in the revised draft, but some states did not approve that either on fears of losing autonomy.