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FinMin hopeful of state finance ministers consensus on GST
October, 29th 2010

The Centre on Friday exuded confidence that state finance ministers will be able to achieve consensus at their Goa meeting and pave the way for implementation of the Goods and Services Tax (GST), which has been hanging fire for quite some time.

The empowered State Finance Ministers are meeting today. I am hopeful there will be a consensus which we can accept and bring in the GST some time in the next financial year, Revenue Secretary Sunil Mitra told reporters on the sidelines of a FICCI Tax conference here.

The roll out of GST, which will subsume excise duty and service tax at the Centres level and VAT on the states front, besides local levies, has already missed a deadline of April one, 2010. The new deadline of April 1, 2011 is also likely to be missed and the Centre has now said that it may be rolled out sometime in the next financial year.

The state finance ministers are attending a 2-day meeting of the Empowered Committee of State Finance ministers in Goa, starting today. The State FMs will discuss the GST model received from the central government to arrive at a consensus and may suggest their own alternative proposal.

Mr. Mitra said he expects the state FMs to reach a consensus on the GST structure today and present the counter draft amendment bill to the Centre.

We are expecting them (State FMs) to give us a counter of the draft GST Amendment Bill, or whatever passes muster or has consensus among sates. When we get that we shall respond, he said.

The GST Council and Dispute Settlement Authority were key features in the initial draft of the Constitution Amendment Bill formulated by the Centre and sent to the Empowered Committee of State Finance Ministers on GST for approval.

Some states including West Bengal, which heads the state GST panel -- do not agree with the Centres proposal on the constitution of a GST Council, led by the Union Finance Minister, to deliberate on the state subject of indirect taxes.

The states had rejected the first draft of the Centre, alleging that it gave veto power to the Union Finance Minister on state taxation issues. The draft had proposed that changes in GST could only be made with the consent of the Union Finance Minister and a two-thirds majority of the states in the council.

After the states opposition, the Centre had floated a second draft proposing that alteration in GST could only be done when there is complete consensus.

While Congress-ruled states agreed to the idea, BJP-ruled states, Uttar Pradesh and Tamil Nadu opposed even the second draft.

The BJP-ruled states wanted to know the exact meaning of consensus and have suggested that the word be replaced with consent

These states are also opposing the Dispute Settlement Authority proposed by the Centre. The authority is proposed to be chaired by a retired judge of the Supreme Court to resolve disputes arising out of the GST regime.

Eight to 10 states have been opposing the dispute settlement mechanism, including Tamil Nadu and Uttar Pradesh, Madhya Pradesh Finance Minister Raghavji had said.

Now, even Empowered Committee Chairman Asim Dasgupta, who is the Finance Minister of West Bengal, suggested that both the GST Council and Dispute Settlement Authority should be done away with.

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