The eighth meeting of the Goods and Services Tax Council failed yet again to reach a consensus on the critical issue of dual control, a major roadblock in the finalisation of the draft GST laws, Union Finance Minister Arun Jaitley said on Wednesday. The Council will meet again on January 16.
Mr. Jaitley, briefing reporters on the two-day meeting, said he expected both direct and indirect tax collections at the end of the year to exceed the budget estimates.
After the first day of the meeting on Tuesday, several State Finance Ministers said the April 1 deadline for the rollout of GST looked unlikely, with the likelihood of a July or September rollout increasing.
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“The legal drafts of the draft laws with gaps have been sent for legal vetting and will be presented before the GST Council,” Mr. Jaitley said.
“The gaps refer to two broad areas. The first is the definition of the word ‘territory’, and the second has to do with the issue of dual control and cross empowerment.
“The territory issue is a complex one. The area of 12 nautical miles from the India coast is Indian territory,” he explained.
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“Service tax in this area has been levied by the Government of India. But fishing in these areas has been taxed by the States.”
“The answer to this is not political, it is purely a constitutional issue,” Mr. Jaitley said.
One other issue raised by the States was the compensation, and how this amount should be increased due to the hit to State revenues caused by the demonetisation of high value currency notes.
“I have asked the States to give their revenue projections for the month of November, and also for the last two to three years, and then we will look into the matter,” Mr. Jaitley said.
Pre-Budget meeting
The Union Finance Minister also held a pre-Budget consultative meeting with the State Finance Ministers following the GST Council meeting. West Bengal Finance Minister Amit Mitra walked out in protest from the meeting stating that the Union Budget has become a meaningless exercise.
“The Prime Minister delivered a part of the Budget speech. He covered most of the important sectors [during his New Year’s Eve speech],” Mr. Mitra said, outside the meeting venue. “This has never happened before. What is the role of the Finance Minister?”
However, before leaving the meeting, Mr. Mitra made his presentation to Mr. Jaitley.