The Centre is firm on its stand of dual administrative control over entities with annual turnover of up to Rs 1.5 crore a week before the first meeting of the Goods and Services Tax Council.
States want sole powers to assess, scrutinise and enforce the GST on entities with annual turnover of up to Rs 1.5 crore and dual control over that. The Centre wants dual control all through or exclusive control over the Rs 1.5 crore limit.
Finance ministry officials argue dual control is vital because the Centre is accountable to Parliament for its share of the tax. “Tomorrow, if Parliament asks why the tax base is not increasing, the Centre will be unable to answer. And states may say they have an elected body to whom they are answerable,” an official said.
The matter is among three key issues facing the GST Council, and if unresolved could prove to be a hurdle for the April 1 rollout of the tax. The other two issues are tax rates and geographical exemptions. The first GST Council meeting is scheduled on September 22-23 and will thrash out these issues. The council will be chaired by Finance Minister Arun Jaitley and will have representatives from states.
States have two-thirds of voting rights in the council and the Centre the rest. Any proposal needs three-fourths majority to be passed by the council.”If it is a tax where the money will go to two different governments, they both must have the ability to administer it,” said an official.
The Centre has proposed a cross-empowerment model where both the Centre and states have administrative control. Whoever strikes first will carry out the assessment and adjudication. “Cross-empowerment will ensure there is no hassle for the taxpayer in terms of reporting,” said another official. “The issue of cross-empowerment will have to come up for discussion in the meeting of the GST Council. We will continue to make efforts with the states to arrive at a consensus,” the official added.