Finance Minister Buggana Rajendranath Reddy reiterated the State government’s stand in the 45th GST Council meeting chaired by Union Finance Minister Nirmala Sitharaman in Lucknow on Friday that since petrol and diesel are in the sole domain of the States, they should not be subsumed in the Goods and Services Tax (GST).
Mr. Rajendranath Reddy was referring to certain observations made by the Kerala High Court on bringing the petroleum products under the purview of GST. The Finance Minister raised several issues which impact the State’s revenues, the taxation powers of States under the federal structure as enshrined in the Constitution and the functioning of trade and industry vis à vis the GST.
With regard to the extension of providing GST compensation beyond 2022, Mr. Rajendranath Reddy said the State’s revenues under GST did not match that of the VAT regime. While the State recorded an average annual growth of 14-15% during the three years preceding 2017 when GST was introduced, the average growth in the last four years was around 10%, which necessitated the payment of compensation every year.
Added to this was a steep fall in tax revenues, including GST, in the two ‘pandemic years’ (2020-21 and 2021-22) which seriously affected developmental and welfare activities in the State, Mr. Rajendranath Reddy said.
The Finance Minister said that though the revenues were expected to rebound to some extent next year, it might not be up to the previous level (14-15%). Therefore, Andhra Pradesh requires additional funds in the form of compensation from the Government of India, he insisted.
The Finance Minister requested the GST Council to reduce the tax on polished napa slabs to 5% and solar power plants and on job works in liquor manufacturing and to study if spice water can be treated at par with aerated drinks which attract 28% GST plus 12% compensation cess.
Later, Mr. Rajendranath Reddy submitted a representations on various GST-related issues to Ms. Sitharaman, and appealed to her to take steps for an early release of the compensation due to the State for the period till August, 2021. He was accompanied by Special Chief Secretary (Revenue) Rajat Bhargava.
