GST Council’s 9th meet fails to break dual control deadlock

Goods and service Tax

The possibility of implementing the Goods and Services Tax (GST) by the Centre’s targeted deadline of April 1, 2017, has receded with the ninth meeting of the GST Council here failing to agree on the contentious issue of administrative control of GST, Kerala Finance Minister Thomas Isaac said on Monday.

Emerging from the meeting of the GST Council here, Isaac told reporters that no consensus had emerged on the issue of dual control over assessees under the proposed GST, and as such there was very little possibility of the new indirect tax regime being implemented by the targeted date of April 1.

He said no dates had been decided on the next meeting to sort out this contentious issue, which is now likely to be held only after the presentation of the Union Budget on February 1 by Finance Minister Arun Jaitley, who also heads the GST Council.

Eight earlier meetings of the Council have failed to resolve the deadlock between the Centre and the states on the issue of “cross empowerment”, or dual control of assessees, and who will exercise control over them.

The states want exclusive control on businesses with turnover below Rs 1.5 crore (the current threshold for central excise), including the service taxpayers.

“Tamil Nadu has presented a compromise formula whereby states will have control over small assesees with turnover less than Rs 1.5 crore, while a small percentage of assesees … 10 per cent, could be given to the Centre for audit purposes,” Isaac said.

Isaac also said that consensus had almost been reached on the territorial control issue of levying Goods and Services Tax on the high seas. The Centre’s proposal to tax transactions that take place within 12 nautical miles from coastal state borders has been opposed by several states, which stand to lose substantial revenue in this way.

“On the territorial issue, we have agreed that states will continue to tax as they have been doing,” Isaac said.