The Uttarakhand Commercial Tax Service Association on Tuesday opposed the GST Council’s decision to keep the States out of the tax administration process under IGST, saying it went against the principle of fiscal federalism by narrowing down the role of States and their dealer base.
Criticising the GST Council’s handing over the complete administration of ‘services’ to the Central Board of Excise and Customs (CBEC) at its very first meeting on September 24, Association’s president Yashpal Singh said it was unfair on part of the Council to take away the tax administration domain from State agencies citing their “lack of experience“.
“Not only that but the Council also negated the right of State’s absolute control of administration of such dealers which had an annual turnover of up to one and half crores, which was the result of prolonged debates,” he said.
According to the proposed changes after the GST, the Centre would levy and collect the Integrated Goods and Services Tax (IGST) on all inter—State supplies of goods and services in case of inter—State transactions.
On CBEC’s charge that the States are against the GST roll out, and their struggle for “more work” and opposition makes their intentions dubious in nature, Mr. Singh said the allegation was totally baseless and false.
“In reality the States are completely in favour of the GST and the enthusiasm shown by them in ratifying the constitutional amendment proves the falsity of this bogus charge,” he said.
The States are opposed only to the idea of being kept out of the administration of “services“ and there are primarily two reasons for this, he said.
“First the argument cited by the GST Council that State tax authorities are ‘inexperienced’ to divest them of administration of services is demeaning to them. And secondly, the Model GST Law has included many transactions under the definition of ‘services’ like work contract, transfer of the right to use, and transactions done by hotels and restaurants etc, which were hitherto covered under the category of ’goods’,” Mr. Singh said.
In consequence, approximately about one third of the current tax base of states will shift from the control of states, which would be detrimental to the future prospect of state’s service cadres, the Association president said. - PTI
