Minister for Commercial Taxes and Registration said Rs.20,000 cr. revenue was realised last fiscal from these non-VAT goods

Tamil Nadu on Monday opposed any move to bring petroleum products and liquor in the ambit of Goods and Services Tax (GST) as this may, it fears, result in considerable erosion in its tax revenue.

Reiterating its stand that these goods should be constitutionally debarred from levy of GST, Minister for Commercial Taxes and Registration B.V.Ramanaa said Rs.20,000 crore revenue was realised last fiscal from these non-VAT (Value-Added Tax) goods. This translates into around 50 per cent of the sales tax revenue.

Speaking at a meeting of the Empowered Committee of State Finance Ministers (Finance/Taxation) in New Delhi, he said these products were also kept out of the purview of VAT. All States, he pointed out, had agreed that these products should not be brought under the GST since that could lead to adverse financial and administrative implications.

Tamil Nadu, Mr.Ramanaa said, was opposed to the constitution of the GST Council in any form and Advisory Committees under the Council to resolve the disputes relating to GST. “These Advisory Committees are another subtle and indirect way of bringing in the already proposed and since deleted GST Dispute Settlement Authority. As the model of Empowered Committee has facilitated the smooth transition to VAT regime, our State considers that the same model will achieve the objective, in the place of GST Council,” he said.

Tax on the sale of goods, he said, was the only source of revenue that the States still have.

Their control over the levy and collection of the tax had been a significant factor enabling some of the States, including Tamil Nadu, to raise adequate resources to finance their budgets and plans. “This critical source of revenue is now under threat by the proposed implementation of GST,” he said.

As per the scheme of the revised Bill, the proposed GST Council by majority decision will recommend to the States on taxes, cesses and surcharges levied by the State and the Local Bodies to be subsumed in GST. It would also specify the Goods and Services that are to be exempted; the threshold limit for the levy of GST; the rates including floor rates with bands, etc.