The Group of Ministers (GoM) formed to look into imposition of sugar cess under the goods and services tax (GST) has decided against the levy and instead may look at the option of levying 1 per cent agriculture cess on luxury goods, if the Attorney General (A-G) gives his nod. The ministerial panel, headed by Assam Finance Minister Himanta Biswa Sarma, has recommended reducing GST rate on ethanol from 18 per cent to 12 per cent.
The panel does not favour imposing cess on sugar as arrears to cane farmers are already declining but will wait for Attorney General’s opinion before taking a view on whether such a cess can be levied at all under the current GST regime, officials said.
The panel will submit its recommendations with the GST Council at its next meeting on July 21.
The GST Council in its last meeting in May had constituted the GoM to look into the food ministry’s proposal of imposition of cess of up to Rs 3 per kg on supply of sugar over and above 5 per cent GST rate. The proceeds from the levy, estimated at Rs 6,700 crore, would flow into a separate fund to be utilised for interventions in the sugar sector and for cane farmers.
Briefing reporters after the GoM meeting today, Sarma said that after fixing the Minimum Support Price (MSP) for sugar at Rs 29 a kg, the arrears due to cane farmers have come down by Rs 5,000 crore to Rs 18,000 crore. “Considering this positive development, we do not think there is a case for levying cess on sugar at the moment,” Sarma said.
Officials said meanwhile that the panel is likely to recommend lowering GST rate on ethanol to 12 per cent GST, though food ministry had been batting for 5 per cent rate.
The Union Cabinet had last month cleared a bailout package of over Rs 8,000 crore for the sugar industry to help the cash-starved mills to clear dues to farmers. It had also fixed a MSP of Rs 29 a kg.
AG, who is government’s top lawyer, has not yet given his opinion because a case with regard to cess under GST is pending in the Supreme Court. In case AG gives its views to GoM, it could meet for one more time before the GST Council meeting on July 21.