GST passage hit again as states demand larger pie

New Delhi: The GST Council meeting on Tuesday got struck over states demanding taxation rights for sales in high seas and demand that more items should be brought under cess to compensate them with revenue loss of around Rs 90,000 crore post demonetisation.

The eighth meeting of GST council did not even take up the issue of dual control on Tuesday another contentious holding up GST roll out.

Earlier it was agreed that a Rs 55,000 crore GST compensation fund would be created by levying cess on demerit or sin goods and luxury items.

However, states now claim that after demonetisation the compensation amount is expected to go up to Rs 90,000 crore as most states have seen revenue decline of up to 40 per cent.

Amit Mitra said tax revenue in November 2016, the month of demonetisation, contracted by (-)2 per cent. “Every state said their taxes have fallen by 30-40 per cent.  Every states compensation would go up. We had initially estimated that at most five states would need compensation, because 14 per cent rate of growth others would achieve,” he said.

“Today many states would need compensation. If you need Rs 80,000-90,000 crore, instead of Rs 55,000 crore, where will it come from? That’s a double whammy. States are interested that Centre should stick to its constitutional commitment,” Mr Mitra said.

Another issue that came up was that coastal states pressed for rights to levy GST on trade of goods within 12 nautical miles offshore, holding up finalising of the draft law for levy of Integrated-GST on inter-state trade.