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GST: Centre, states differ on taxation in high seas
Jan '17
Coastal states like West Bengal, Kerala and Karnataka have asked for levying taxes on goods within 12 nautical miles in the sea, thus delaying the Integrated Goods and Services Tax (IGST) draft law on inter-state trade. The Council failed to reach a consensus on defining a state and whether to include 12 nautical miles of high seas in states’ jurisdiction.

The draft IGST law was to offer taxation rights in the high seas to the Centre, even as states like Karnataka, Maharashtra, Gujarat, Odisha, West Bengal and Kerala are currently charging sales tax and VAT for goods within 12 nautical miles.

Following the demand for taxation rights in high seas, Union finance minister and chairman of the GST Council Arun Jaitley has agreed to take legal opinion regarding its constitutional validity, according to media reports.

The GST Council did not take up the issue of administrative control over assessees on the first day of the eighth Council meeting. It will be discussed on the second day.

Additionally, states have also demanded an increase in the number of items on which cess should be levied to compensate them after the bill is rolled out in the country. A fund of Rs 55,000 crore was proposed initially to compensate the states for revenue losses by levying additional cess on luxury items and sin goods. However, the amount could go up to Rs 90,000 crore as states have witnessed a 40 per cent decline in revenues following the decision of demonetisation.

Most state representatives were of the opinion that April 1 target of the GST bill is impossible to achieve and it would only be rolled out by September this year. (KD)

Fibre2Fashion News Desk – India

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