Prickly issue of administrative turf for discussion on Friday

The Goods and Services Tax (GST) Council, comprising the Union finance minister and state representatives, mainly their finance ministers, cleared most of the draft model GST Bill on Thursday.

This leaves mainly the contentious issue of administrative turf between the Centre and states for Friday. Some state finance ministers did not rule out the Centre resorting to voting for resolving the issue of control over assessees under the proposed regime.

Beside administrative turf, the Friday meeting will take up the Integrated GST (IGST) and compensation Bills. Agreement over these would be crucial for introducing these in the coming session of Parliament.

"The basic model GST Bill has been concluded. Things we have kept aside, such as the issue of cross-empowerment and IGST, will come for discussion tomorrow," Jammu and Kashmir finance minister Haseeb Drabu told reporters after the meeting. He said it was decided earlier as well to go through the entire draft model law first and clear all procedural parts; that has been done.

The issue of administrative turf has been stuck for some time, despite an initial agreement between Centre and states. While the Centre is pushing for a cross-empowerment model of randomly choosing and dividing five per cent of the assessees between itself and the states, using a computer programme, states want sole control over assessees up to Rs 1.5 crore of annual turnover.

Earlier, it was expected the Bills would be introduced in the winter session of Parliament but that ended last week without the GST Council approving these. A consensus or some other resolution to the issue of administrative control over assessees is a must for the legislations to get into the Budget session.

M S Mani, senior director, Deloitte Haskins & Sells, said: “It is better if a consensus is achieved on the legislative issues. The need of the hour is to have clarity on several issues, including that of rates and classification so that businesses can be prepared.”

Kerala finance minister Thomas Isaac, who could not attend the meeting as he was unwell, told Business Standard over a phone that the contentious issues could be sorted only by voting.

If the Bills are introduced in the Budget session, there is hope, though dim, of introducing GST from April 1, when the next financial year begins. Last year's constitutional change allows time till September 16 in this regard. After which, the authority lapses unless the rule is amended.

Asked about the demand of some states to raise the compensation amount to Rs 1.5 lakh crore from Rs 50,000 crore a year due to demonetisation, Drabu said: “I don't think we should link the two.”

To a query on whether the rates would be reworked due to demonetisation, Drabu said GST was not even in force when the latter eventy took place. The Council has already agreed on four GST slabs — 5, 12, 18 and 28 per cent — and a cess over the peak rate on aerated drinks, luxury cars and tobacco.

Isaac added that demonetisation had eroded the trust between Centre and states.