GST Council decisions not binding on states

In the redrafted constitutional amendments Bill for the proposed Goods and Services Tax GST,the Centre is not leaving any efforts to keep all states in good humour....

In the redrafted constitutional amendments Bill for the proposed Goods and Services Tax GST,the Centre is not leaving any efforts to keep all states in good humour. Not only has it proposed veto for all states in the redrafted version originally,only the finance minister had the veto power,it has also suggested that decisions taken by the proposed GST council will only be recommendatory. In the original draft,it was supposed to be binding.

Earlier,states had rejected the Centres draft constitutional amendments Bill terming it as anti-democracy and anti-poor. Sources told The Indian Express that the Centre has now yielded to states demand that the GST council8217;s decision should not be binding and that it would only play a recommendatory role. The Empowered Committee of state finance ministers will meet on August 18 to deliberate upon the new draft. The meeting will decide if the proposed indirect tax regime will be rolled out by April 1,2011.

The GST council,which will represent all states and the Centre,will be the body to formulate rates,thresholds,base,etc. The earlier draft had envisaged it as an authority to decide on the issues relating to GST.

Any decision taken by the proposed GST council was to be approved by a two-third majority of the council and the Union finance minister.

The proposal was rejected by states,which claimed that the proposal was meant to take away the fiscal autonomy presently enjoyed by them under the constitution. This had forced the finance minister to clarify that he had no intention of becoming a super finance minister by usurping states powers.

Now,not only will the states too have a veto power,the role of the Council will also be no more than recommendatory and the states may not agree to the decisions taken by it. However,in that case,when a dispute arises,such cases would be dealt by the proposed GST Authority.

But to states demand that the proposed GST Authority be outside the constitution,the sources said the Centre was in favour of placing the authority in the constitution,but with some dilution.

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Chairman of Empowered Committee of state finance ministers Asim Dasgupta on Wednesday met Finance Minister Pranab Mukherjee and was apprised of the redrafted version,the sources said.

The amendments are the first vital steps towards the implementation of the Goods and Services Tax in India. It would empower the states to levy tax on services while the Centre would be able to levy tax even after the production stage.