Odisha reiterates demand for green cess

Under GST the mineral producing state where pollution may be localized does not get any part of the revenue

The Odisha government has reiterated its demand for imposition of a green cess on the sale of minerals.

The state government raised the demand for green levy at the recent meeting of the empowered committee of state finance ministers on the rollout of the proposed goods and service tax (GST).

Earlier, the empowered group of state finance ministers had turned down Odisha's demand for levy of green tax on mining in the face of opposition from consuming states.

Though Odisha is a mineral-rich state, a major share of minerals are either sold to other states or used in production of goods which are sold to other states. Under GST, the destination principle applies and the mineral producing state where pollution might be localised does not get any part of the revenue. It is only the consuming state that gets the tax revenue whereas the pollution is suffered by the citizens of the producing state.

"Taking into consideration the adverse environmental impact, we propose for levy of an additional non-rebatable cess under GST, which the state may be empowered to levy subject to suitable framing of guidelines after consultation in the proposed GST Council. There should be a new entry in the Seventh Schedule to the Constitution, State List as 54 B- Other Polluting Goods & Services to be notified by GST Council," state Finance Minister Pradip Amat said at the meeting.

Amat also raked up the issue of compensation towards CST (central sales tax) loss.

"The state has claimed Rs 1,885 crore as compensation towards CST reduction from 2007-08 to 2010-11, it has received only Rs 1303 crore. The state has also claimed Rs 869 crore as compensation towards CST loss for the year 2011-12 and Rs 1,087 crore for 2012-13, but it has not received any amount till date. Non release of compensation on account of loss towards CST reduction has caused trust deficit between the Centre and the states," he pointed out.

Amat has also suggested for doing away with dual control under the proposed GST regime.

"Under GST, both the Centre and the states have jurisdiction and the central and state authorities are competent to do scrutiny, audit and enforcement and also assessment. The dealers will be subject to dual authority. We need to provide to the dealers a hassle-free environment for doing business by introducing a modern and simple system. We should not end up in creating a complicated and onerous tax administration for the taxpayers," he added.