The disagreement emerged between the states and Centre regarding the Centre’s administrative control of service tax assessees, which was earlier accepted in the first meeting. The council didn’t accept the points noted down on the first meeting which was held on 23rd September.
Arun Jaitley said that “With regard to one item recorded in the minutes with regard to the service tax assessment in the new dispensation. There was a long discussion on the interpretation of the decision taken at the last meeting and that discussion consumed a lot of time today. That discussion was inconclusive and therefore it will continue at the next meeting on 18th (October).”
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There was a sudden twist in what was decided and what has been gone in the session as the agreement went rolling smooth while in the first meeting. Mr. Jaitley said that “Now these rules are with regard to registration, rules for payments, return, refund, and invoices. These rules are notified once the Act is passed…these five sets of rules were taken up of consideration and have been approved. So we are in a state of readiness with the subordinate legislation once the Act itself is approved.”
He also added that “The rules approved will form part of the supporting legislations needed to roll out the GST regime. “So once the Act is passed by Parliament or by the state legislatures as the case may be, we want the draft rules to be ready so that the rules can be notified immediately,”
The proposed exemption came up from excise duty relaxation to the 11 Northeast and hill states while the incentives have been offered to the businessman and dealers to invest in their respective states.
While on the exemption scenario, the finance minister cleared out that, “It is possible that some of the exemptions may get phased out…the Council took up for discussion the management of these exemptions and it was agreed that there would be a levy of tax under the GST system on all exempted entities…once the tax is levied, the central govt or state government, which gets that tax, would then reimburse from the Budget, that quantum of tax back to exempted entity.”
Other than the discussion on dual control of the states and centre over the assessees, the council has also to maintain status quo for assessment of 11 lakh service tax assessees while new assessees which would be added to the list would be divided between the Centre and states.
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In the next meeting, there will be more topics to be discussed along with discussions on service tax assessment and the formula for calculating compensation for states in the scenario of the revenue shortfall. The next meeting has been decided to take place on 18th to 20th October.
