The second day of the Goods and Services Tax Council meeting was not as fruitful as the first, as a consensus on the administrative control of businesses and cross-empowerment proved elusive. The States continued to seek greater control of assessees.
“This issue is very contentious, and its consequences still have to work themselves out. So, there is a requirement of cross-empowerment coupled with defined jurisdictions,” said Finance Minister Arun Jaitley after the fourth meeting of the GST Council on Friday.
Two options The Council discussed two options: horizontal and vertical division of assessees, the Minister said. Under the proposal for horizontal division, States would be given single control of all assessees with an annual turnover of up to ₹1.5 crore, beyond which there would be cross-empowerment of Centre and State officials. In the vertical division, both the Centre and the States will get a fixed number of assessees.
Sources indicated that most States were keen to go for the horizontal division of assessees.
“The pros and cons of the formations were discussed today. We don’t want to rush into anything as the consequences are unseen,” said Jaitley. The mechanism of administrative control would also be uniform for both services and goods producers, he further said, pointing out that there were several activities such as work contracts and restaurants that pay both service tax as well as central excise duty or value added tax.
Stressing that a substantial part of the discussions on dual control has now been completed, Jaitley said he has called an informal meeting with State Finance Ministers for November 20 to find a solution.
Meeting deferred The meeting of the GST Council, which was earlier scheduled for November 9 and 10, has been deferred. It will now meet on November 24 and 25 to approve the issue as well as finalise the draft model legislations for Centre, State and integrated GST as well as the compensation law.
Officers will now begin discussions on the four draft laws and finalise their reports by November 15, following which States will be given a week to study them.
Despite the delay, Jaitley expressed confidence that the Bills for Central GST and integrated GST would be passed in the forthcoming Winter Session of Parliament. The Centre hopes to roll out GST from April 1, 2017.