Centre did not address concerns over GST: Yanamala

Hyderabad, May 8 (INN): Andhra Pradesh Finance Minister Yanamala Ramakrishnudu stated that all the State Governments have agreed to implement GST in the interest of the nation, although it will result in loss of revenue to the States.

However, he said there were lot of concerns which remained unaddressed by the Government of India. He expressed these views while addressing the Empowered Committee of State Finance Ministers on GST at Tiruvananthapuram in Kerala State on Thursday and Friday.

The GST Council is going to be an apex body, taking all decisions on all the crucial matters related to GST. The 122nd Constitution Amendment bill provides for 2/3rd weightage to the voting of all the State Governments and 1/3rd weightage to the voting of the centre. For any decision to be taken in the council 3/4th weighted voting is required. Therefore the Central Government virtually enjoys veto power at the time of taking decisions in the 'GST Council'. Even if all the States come together unless the Central Government agrees a resolution can't be passed which is unfair. This issue needs to be addressed in the bill and a weightage of 3/4 should be given to the votes of all the State Governments put together, Yanamala said.

'Inclusion of Petroleum Products and Tobacco Products in GST is not acceptable. Exclusion of Tobacco Products in the Entry 54 of the State List keeping it in Entry 84 of Union List is discriminatory and will result in loss of substantial revenue to the State Governments from Tobacco Products. State Governments also should be given power to levy Tax on Tobacco Products on par with Central Government,' he said.

Yanamala said even though the Andhra Pradesh Government has been constantly and consistently representing that the Advertisement Tax, levied and collected by the local bodies, and the Betting and Gambling Tax should not be subsumed in GST, the Draft Constitution Amendment Bill ignored the request. 'By removing the Advertisement Tax by way of omitting Entry 55 of the State List totally, the tax base of the local bodies will get reduced drastically. Similarly, the Betting and Gambling Tax, levied on the amounts, representing Bets, is neither goods based nor service based tax and there is no reason why the Betting and Gambling Tax should be subsumed in GST'. Therefore, the taxes on Advertisements should be retained in Entry 55 of the State List and the taxes on Betting and Gambling should also be retained in Entry 62 of the State List,' he said.

Further, he demanded that the State Component of RNR (Revenue Neutral Rate) should not be less than 25% so that there is no loss of revenue to the State Government. He also said that there was no clarity on the constitutional guarantee on the compensation to be paid by the Central Government to the State Governments on the likely loss of revenue to the State Governments in view of implementation of GST.

'There is a need to empower the State Governments to administer the Goods and Service Tax on the supplies in the course of interstate trade and commerce, levied under clause (1) of Article 269A (IGST). Such a power is required to assess the transactions of local supplies, camouflaged as the interstate supplies. The States are required to have powers to access the books of accounts, maintained under IGST, and to assess the tax due under State GST by rejecting the bogus claims of interstate transactions. The provision in the Amendment Bill is in contrast to the existing Article 269, which confers the power to administer CST on the State Authorities. In the absence of such provision, the States will not have any authority to check the genuineness of the interstate transactions,' the Finance Minister said.

Yanamala said that the proposals placed before the Empowered Committee to collect user fee from the dealers to ensure self sustainability of GSTN (Goods and Services Tax Network) is not acceptable. 'The expenditure on GSTN should be met out of the taxes collected by the Central Government and State Governments. The expenditure on GSTN should be borne by the Central Government and State Governments in equal ratio. Share of State Government should be based on Tax Collected rather than on number of dealers. In case of delayed implementation of GST, expenditure on GSTN should be met by Central Government completely as States have no role to play in passing of the Constitution Amendment Bill,' he said.