VAT panel seeks quasi-judicial status to settle disputes

The empowered committee of state finance ministers on value added tax (VAT) is planning to assume quasi-judicial status to settle inter-state disputes relating to the new tax regime.

"A blueprint on how to empower the empowered committee is ready. We have to discuss it at the empowered committee meeting to decide about the structure of the panel," member secretary of the body Ramesh Chandra told reporters on the sidelines of a seminar organised by the Confederation of Indian Industry.

He said the quasi-judicial status for the committee can be achieved if all states agreed to the proposal.

Though the empowered committee had set specific guidelines about the implementation of VAT, it has been alleged that a number of states have not adhered to the committee's white paper while enacting their VAT legislations.

In a number of cases, disputes have arisen between states relating to tax rate for certain items. Some traders, including those in Delhi, had complained about trade diversion because of lower tax rate in the neighbouring states.

Chandra said it would take a year to have similar VAT laws with uniform tax structure across all the states, admitting that different states had expressed different views on tax rates.

"We can't take decision by vote. Rather we have to go by consensus," he said, adding that the committee would implement a Harmonised System of Nomenclature (HSN) by the end of June.

Chandra said the committee was in continuous contact with the eight states which have not yet moved to VAT. "Our dialogue with these eight states is on and I will not be surprised if they join the new system shortly," he said.

Uttar Pradesh, Uttaranchal, Tamil Nadu, besides the five Bharatiya Janata Party-ruled states "� Gujarat, Rajasthan, Madhya Pradesh, Chhattisgarh and Jharkhand "� have not introduced the new tax system.

The meeting of empowered committee with state tax officials, scheduled for May 12, has been deferred and the new date has not been fixed as yet.