Non-coal bearing states are opposing the move.
Orissa’s demand for keeping coal royalty out of the purview of the Goods and Service Tax (GST) has got a setback, with non-coal bearing states opposing the move.
The Empowered Committee of State Finance Ministers, headed by West Bengal Finance Minister Asim Dasgupta, in its meeting earlier last month, decided to reconsider the demand to keep coal royalty out of the fold of GST.
“Non-coal bearing states in the country are opposing the move to keep coal royalty out of the purview of GST. Now, the empowered committee has decided to do a rethink on the demand,” an official source told Business Standard.
It may be noted that the empowered committee had assured Orissa finance minister Prafulla Chandra Ghadai at its GST meet on October 29 in Goa that coal royalty would be kept out of GST.
Since natural gas, which was included in the VAT (Value Added Tax) list, has been kept out of GST on the ground that it is used for generation of power, Orissa had argued that coal must also be kept out of GST. The state had pointed out that GST on coal would have a direct effect on cost of power.
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At present, four per cent VAT is levied on coal. If it is included in the GST list, the effective rate would be 12 per cent, as both state GST and Central GST would be levied at six per cent each on coal.
Moreover, the state had demanded that the entry tax be kept out of GST’s ambit. The state government had categorically said it would not roll out GST if the entry tax was not kept out of the purview.
Every year, the state government earns around Rs 800 crore by the way of entry tax and Ghadai had pointed out that this tax should not be brought under the fold of GST. Meanwhile, no decision has been taken so far on the mechanism of settlement of disputes pertaining to GST.
It has been suggested by the empowered committee that a dispute settlement authority, chaired by a retired judge of the Supreme Court, be created for settlement of disputes. The Orissa government had suggested that this could be resolved by the GST Council itself.
The state had also suggested that the assessment and payment of compensation for loss to states on account of the rollout of GST could be done by an independent committee comprising members drawn from the GST Council and chaired by the Union minister of state for finance.