State govts give opposing suggestions on GST statute

Three proposals on Centre’s proposed Constitution amendment.

State governments have suggested a third alternative to the central government on the proposed Constitutional amendment for introduction of a Goods and Services Tax (GST).

They’ve proposed a sub-committee under the proposed GST Council or the Empowered Committee of State Finance Ministers to resolve any disputes in the tax’s implementation. In a letter to Union finance minister Pranab Mukherjee, Empowered Committee chairman and West Bengal finance minister, Asim Dasgupta, said on the basis of the working of the GST Council and the sub-committee, the Centre could consider a Constitutional Amendment for creating a GST Disputes Settlement Authority, if required, at a later point in time.

Under the first option, he proposed setting up a GST Council and Dispute Settlement Authority, to be inserted as new provisions in Article 279, and giving flexibility to states in times of economic exigencies and natural calamities. The second option was to omit these altogether.

These earlier options were discussed in the Goa meeting of the Empowered Committee last month. States were divided in their opinion, while some suggested a Constitutional provision, Article 279A, be kept as in the revised draft of the Centre, with some minor modifications.

Dasgupta said flexibility should be provided to the states in times of economic exigencies, disasters and natural calamities, and there should be special schemes for the northeastern states and special category ones. The Empowered Committee had conveyed states’ views to the Centre in this letter and moved on to discussing the GST structure in its last meeting on December 6. The Centre now has to decide.

A Union finance ministry official, however, said there was no unanimity in the views of the states. He also said the third alternative was not feasible.

Earlier this month, Mukherjee had said the Centre was willing to consider a phased approach for the introduction of GST to evolve a consensus on the issue. “We have revised our position to accommodate the concerns of the state governments. The Centre is willing to consider a phased approach for the introduction of the GST. In a departure from our earlier stand, as a transitory measure, we are also willing to accept a dual rate structure that can eventually lead to a model GST regime,” he had said.

The GST is expected to improve tax collection and boost economic development by integrating the Indian market through a uniform tax rate.