The Madhya Pradesh government will take on the Centre in the next meeting of state finance ministers on goods and Service tax (GST), scheduled for next week in Bhubaneswar, its finance minister, Raghavji, told Business Standard.
The state finance minister will pinpoint the way of its approach on debate and discussions took place so far. The empowered committee of states’ finance ministers will meet in Bhubaneswar on 28-29th of this month.
“The state will stick to its stand of opposing GSTin its present form. The discussions happened during the last three years have yet not yielded any result instead the debate is going wider. They have yet not been able to make a consensus since the Centre has no logical solution to it,” Raghavji said.
Raghavji has already made it clear that additional tax base which will accrue to states from GST will be minuscule and smaller than the losses of revenue from removal of Central Sales Tax.
Further, according to him, many activities of service sector already contribute to the tax revenue of states in the existing tax regime. And this system insulates states through constitutional provisions pertaining to distribution of taxation powers between states and the Union government.
Raghavji added, “Our stand will remain the same, yet we do not oppose the GST but we oppose the present form of GST presented by the Central government.”
There are certain other issues, which needs to be addressed. It is practically impossible for the states to levy and collect taxes and transfer it to Centre. The system defines that Centre can levy, collect and transfer taxes state share.
According to a well-placed source, “The article 270 of the constitution has defined it. The state has already pointed out why Centre wants Parliament to design taxes and ask states to levy them. As a customary the agency which levy taxes, also design taxes. It is not possible in the existing constitutional system.”
The source pointed out that collection of taxes by states was not a plain exercise; it also requires design, assessment, monitoring, appeal and reddressal. Also the committee needs to finalize the design of GST, as in many cases there would be a conflict of taxing powers of the Union and the state because the concurrent jurisdiction on GST should be necessarily avoided.