Centre-state GST disputes to be heard by new tribunal

The draft constitutional amendments,vital for the introduction of the proposed Goods and Services Tax GST,have proposed...

The draft constitutional amendments,vital for the introduction of the proposed Goods and Services Tax GST,have proposed the setting up of a tribunal to resolve the disputes arising between the Centre and states in the proposed GST council.

The GST council,a body comprising the finance ministers of states to be headed by the union finance minister,would be responsible for the proposed indirect tax regimes structure. Any deviation from the agreed structure would require approval of two-third majority of states. However,the decisions would be taken with the approval of the finance minister.

However,in the event of a dispute within the council,the members would be able to appeal in the proposed tribunal,sources told The Indian Express.

The tribunal,which is based on the model of WTO Dispute Resolution Mechanism,would be empowered by the constitution to penalise the party not complying with the agreed norms. The sources said that the tribunal may penalise the states in form of lower compensation. However,the penalty for both the centre and states has not been worked out yet.

The amendments,which have been finalised by the finance ministry and are being vetted by the law ministry,would pave way for the roll out of the proposed tax regime,which would subsume all central and state levy like excise,VAT,and service tax. There are indications that the bill for constitutional amendments is likely to be introduced in Parliament during the upcoming monsoon session starting July 26.

The GST regime would help in reducing the cascading effect of several taxes levied at present.

As regard the exemptions list,the sources said that the centre has decided to go by the list that already exists with the states for Value Added Tax. The state list contains 99 items and the centre has agreed to exempt the same items from GST purview. At present,the centre has exempt some 357 items from the payment of central levies. But with the roll out of GST,all items except these 99 items would be taxed as per GST rates.

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However,the centre is yet to work out the items which are to be placed under the category of standard and lower rates,the sources added.