The meeting of the Goods and Services Tax Council failed yet again to reach a consensus on the critical issue of dual control, a major roadblock in the finalisation of the draft GST laws.
The issues between centre and states:
1. The definition of the word ‘territory’: The territory issue is a complex one. The area of 12 nautical miles from the India coast is Indian territory . Service tax in this area has been levied by the Government of India. But fishing in these areas has been taxed by the States.
The States want to continue taxing the region, whereas the Centre has said that constitutionally those areas are not part of States or Union Territories.
2. The issue of dual control : An agreement on the crucial issue of dual control, which envisage a division of control over tax assessees between the states and the Centre under the proposed Goods and Services Tax (GST) is yet to be reached.
3. One other issue raised by the States was the compensation, and how this amount should be increased due to the hit to State revenues caused by the demonetisation of high value currency notes.
4. Cross empowerment: A ‘cross-empowerment’ model is being discussed to ensure a taxpayer with an annual turnover above Rs 1.5 crore deals with only one authority for all taxes. Centre argues only it should have right to deal with taxpayers with an annual turnover above Rs 1.5 crore ans states should deal with taxpayers upeo Rs. 1.5 crore turnover whereas State governments oppose this argument.