GST deadlock continues

New Delhi: Goods and Services Tax Council, a high-level body of the Centre and states which met on Saturday for a straight second day, failed once again to reach a consensus on how they divide tax payers among themselves for assessment under the new proposed tax regime.

The fifth GST Council meeting also couldn’t complete the approval process for the four drafts — Central GST, State GST, Integrated GST and State Compensation Law.

The Council, which has Union finance minister Arun Jaitley as the chairman and state finance ministers as members will now meet again on December 11 and 12 to try to reach a consensus on the sticky issue of jurisdiction on tax payers. Mr Jaitley indicated that he was not in favour of voting to resolve the issue at this stage and would like to settle the issue by reaching a consensus. But in case things are not resolved, the FM may be forced to conduct a voting.

“Are we close to resolving this issue (on cross-empowerment or dual control)? I will keep my fingers crossed. Once this issue is resolved, I would consider it a done deal,” said Mr Jaitley, adding, “I hope during the next meeting on November 11-12, there is a positive movement as far as laws are concerned. But on the critical issue of cross empowerment, two-three suggestions have come.”

He went on to say that the new regime will have to be put in place latest by September 16, 2017, as it is a constitutional requirement. Explaining further, Mr Jaitley said during the two days the Council discussed draft CGST and IGST laws. “We started approving the laws clause by clause and almost nine chapters of each have been discussed. We are heading towards consensus on these laws. There are two other laws — Compensation and IGST, which will be discussed in the next meeting on December 11, 12.  The issue of dual control-linked IGST remains unresolved and we will discuss this as well in the next meeting,” he said.

Talking to reporters after the meeting, Kerala finance minister Thomas Isaac said, “There is no consensus...We were not able to arrive at a consensus regarding the cross empowerment model. Therefore, the GST laws could not be completed.”

Explaining some of the roadblocks faced, West Bengal finance minister Amit Mitra said, “We are sticking to our position that you cannot have dual control. It has to be single control of states below Rs 1.5 crore for the benefit of the poor. We will not bend it.” The second issue, he said, related to laws that would be formulated. “There was a feeling that whatever is put on the table will be accepted by the states. The fact is across political parties everyone has come prepared to discuss and debate the matter. That process has not been completed,” Mr Mitra said.

Elaborating on the Council’s deliberations, Mr Jaitley said there are three proposals. “One is you do a horizontal division, second is a vertical division, third is you work out a hybrid model. The underlying meaning behind that cross-empowerment takes place, but the existing two bureaucracies are separate. We still haven’t reached a stage where we are converging to a federal bureaucracy, which will manage the GST,” the Union minister said.