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States are Free to Fix GST Rates

CA AYUSH AGRAWAL (Kolkata-Pune-Mumbai) (26935 Points)

04 October 2010  

 

 

 

The concept of GST states that there will be a single rate oftaxation in all states and at the Central level in respect to goods and services which are under the purview of the GST, which would simplify the administration oftaxation. On contrary to the earlier line, on 18th August, 2010, New Delhi, the Finance Minister of India, Mr. Pranab Mukherjee stated a shocking statement which has added a flavor to GST. Mr. Pranab Mukherjee stated that the State Finance Ministers have liberty in regard to fixation of their own State GST rate, nevertheless expects that they would not employ this liberty after an accord has reached in the GST Council. Thus, Mr. Pranab Mukherjee has approved for a chief insistence of the States that the Union Finance Minister shall not have the last words on the State GST rates.

Recommendatory Role:

With reverence to the dominance of the legislature with regard to zone of taxation, Mr. Pranab Mukherjee supposed that only a  recommendatory role will be played GST. According to the reworked draft of the Constitutional Amendment Bill, the verdict of the GST Council would be recommendations to the States and Union. This is what Mr. Pranab Mukherjee had to say in lecture to a meeting with the Empowered Committee of State Finance Ministers on Wednesday, “Since these decisions would be taken by consensus, it is for us to respect them and develop a healthy convention of abiding by them, as is the case with several other constitutionally mandated bodies,”. In respect of “binding “the nature of GST commission judgments has previously haggard annotations from numerous States form the perception of loss of autonomy. “Even if the Council’s decisions are not binding, they would be useful as guiding principles which we would choose to ignore or violate only in very grave or exceptional circumstances,” he noted.

States Seek Postponement

“The wisdom lies in moving ahead with the Constitutional Amendment without any further delay as a preparatory step for the introduction of GST. It must be appreciated that the Constitutional amendment is only an enabling provision. It does not prohibit us from continuing our dialogue on rates, exemptions and other issues related to GST,” was said by Mr. Pranab Mukherjee as few State Ministers articulated reservations on the foreword of GST by April 2011 and counseled supplementary postponement. A request was initiated by Mr. Pranab Mukherjee to all states for making an attempt to meet the timeline of preface of GST by April 2011.

Dispute Settlement

Mr. Pranab Mukherjee defended its creation through the Constitutional Amended Bill, stating that there is supposed to a stipulation for establishing an autonomous forum to work out the arguments on rate disparity.

Thus, we observe that a very important matter with regard to variation in rates with respect to states can be seen in near future. The concept o CST has been with a new flavor with states being concerned about their autonomy in such respect.

 


 1 Replies

Harpreet (* * * * * *) (1660 Points)
Replied 04 October 2010

Thanx for sharing this article dear.


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