New Delhi: GST council meeting on Wednesday failed to reach a consensus on who will have jurisdiction over tax payers in the country and who will have right to tax products and services on high seas under the new indirect tax regime. These issues will be once again discussed in the next meeting of the GST Council on January 16. States want exclusive right to assess small tax payers be it for products or services and also want the right to impose tax on products and services in sea.
The failure of states and Centre to thrash out their differences even after series of meetings mean that it is virtually impossible to roll out GST by April 1. However the Centre and the states will have to reach a middle ground by September to roll out GST as without it they will lose the right to tax as per the GST constitutional amendment passed in the parliament. Stating that the issue of territory is a complex one, finance minister Arun Jaitley said the area within 12 nautical miles into the sea is an Indian territory and a question is whose territory is it.
"Conventionally service tax and customs are charged by Government of India in those areas. Some states had, as far as fishing business is concerned the Constitution provides for fishing rights to states in that area. Some states have been levying taxes in the nature of sales tax/VAT," he said. Mr Jaitley said since states have been levying these taxes, they want to continue to levy them, but the contra argument is that high sea area strictly doesn't fall within the definition of state and as per Constitution is an Union Territory. This issue is currently before the Supreme Court.
With regard to the issue of dual control which has been held up for long, he said a majority of states want to find a solution to the issue but the Centre would want to take every decision by consensus. "I have been consciously avoiding the voting. GST Council is a federal institution and a federal institution is a very delicate organisation. The fact that we have so far been able to resolve the issue by discussion, we want to establish this as a precedent of how the Council functions," he said.
