GST Bill: Maharashtra government allays revenue-loss fears

Addressing concerns raised over the design and implementation of the Goods and Services Tax Bill, state Finance Minister Sudhir Mungantiwar said the government would ensure Maharashtra doesn’t lose any revenue.

Written by Priyanka Sahoo | Mumbai | Published:September 20, 2016 5:39 am
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ADDRESSING CONCERNS raised over the design and implementation of the Goods and Services Tax (GST) Bill, state Finance Minister Sudhir Mungantiwar said the government would ensure Maharashtra doesn’t lose any revenue.

The minister was speaking at a panel discussion on the impact of GST on Maharashtra at the Kalina campus of the University of Mumbai (MU), where he invited feedback and suggestions from the public on the government website. Even as experts on the panel agreed the GST Bill was a much-needed tax reform, they raised many concerns, particularly over the losses to be incurred by local bodies owing to the GST.

Former Chief Minister Prithviraj Chavan, who was part of the discussion, said the Bill should be designed such that local bodies such as municipal corporations don’t lose their autonomies. “The Bill must be clear on whether the Central government will compensate for the loss to the BMC from the abolition of Octroi,” said Chavan.

Industries Minister Subhash Desai echoed Chavan’s views and said the Bill should benefit small and medium enterprises, especially in rural areas. Mungantiwar, however, said the abolition of local taxes won’t affect Maharashtra, which is both a manufacturing and consuming state. “Octroi is only levied in Mumbai but that doesn’t mean other districts, where Octroi was abolished in the early 1990s, are not doing well any more,” said Mungantiwar.

The experts said implementation of the Bill would be a bigger challenge owing to the diversity of the country. Chavan and Abhay Pethe, professor in MU’s Economics Department, said the state finance commissions should be given powers equivalent to the National Finance Commission for proper implementation of the Bill. They suggested tax officials would need exhaustive training to implement it. “The GST network proposed by the council has to be robust or the entire economy will come to a standstill,” said Chavan.

The former chief minister also suggested the Bill not be tabled as a money Bill. “Money bills don’t go to the Rajya Sabha, which protect the interest of states. The Union government should not bypass the Rajya Sabha,” said Chavan.

Chavan lists ‘errors’

FORMER Chief Minister Prithviraj Chavan Monday claimed the Centre had committed a “humongous error” while notifying the date of applicability for various sections of the Constitutional amendment for the crucial Goods and Services Tax (GST) reform.

Chavan said this “error” would render excise duty collected on manufactured goods and Octroi collections illegal after September 16.

Hinting at a turf war between the Department of Revenue and the Central Board of Excise and Customs within the ministry, the former chief minister said he was referring to Section 17 of the Act, made applicable from September 16 onwards.

“This Section makes Union excise duty applicable only on petroleum and tobacco products. That means no excise duty can be collected on any manufactured excisable items w.e.f. September 16. Any excise duty collected on these items thereafter is constitutionally illegal.”

Chavan claimed that the ministry had “erroneously” omitted entry 54 of the state list in the Constitution. “This means Octroi collected by the Mumbai municipality is illegal. And so is the Local Body Tax collected by municipalities in Maharashtra from units with a turnover of over Rs 50 crore. Even entry tax in some other states becomes illegal,” said Chavan.

Meanwhile, Revenue Secretary Hasmukh Adhia, who tweeted late Sunday night that the government would clarify the legal position and issue amendments if necessary, Monday tweeted there were no legal infirmities in the notifications.

“The DoR examined the validity and implications of notifications dated 10th and 16th Sept wrt existing taxes imposed by the Union and states,” tweeted Adhia. “The law dept has confirmed that there appears to be no legal requirement to issue any further clarification or notification in this regard.”

But Maharashtra Finance Minister Sudhir Mungantiwar appeared to take the matter lightly. He said it was a “human error” and will be rectified.