The Empowered Committee of State Finance Ministers on Goods and Services Tax (GST) has recommended substantial changes in the Constitutional Amendment Bill proposed by the UPA government.

In a report to the Finance Ministry, the committee, headed by Jammu and Kashmir Finance Minister A.R. Rather, has unanimously rejected the Centre’s proposal to enter GST in the Union List in the Constitution. “The Constitutional Amendment Bill already proposes a clause, 246A, empowering both the States and the Centre to levy the GST,” Mr. Rather told The Hindu. “The States feel that when 246A is there, then the Centre should not have to incorporate GST into the Union List.’’

Clause 246A proposes additional powers to the Centre to tax sale of goods and for the States (to tax services). At present, the Centre can tax services but not sale and distribution of goods. The States can now tax sale and distribution of goods but not services.

“Including GST in the Union List will imply that in case of any disagreement between the Centre and the States, Parliament’s decisions will be overriding and binding on the States,” said Mr. Rather, explaining the rationale behind the rejection of the proposal.

The committee has recommended a 50 per cent quorum for decisions to be considered by the proposed implementation body, the GST Council. Decisions will need support of at least three-fourths of the members present and voting. The council is proposed to be headed by the Union Finance Minister and his deputy will be elected by its members — ministers nominated by the States.

The States’ votes will have greater weight than the Centre’s, it has been recommended.

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