GST Council may Meet Next Week

The apex policy-making body, the Goods and Services Tax ( GST ) Council may meet as early as next week after the approval from the new finance minister.

Tax structure for solar projects, uniform tax rate on state-organized and state-authorized lotteries, taxing non-potable alcohol besides certain changes in the law, extension for the National Anti-profiteering Authority (NAA) and rate rationalization etc., would be the main focuses of the meeting.

“The next meeting is now expected anytime in early June. Though items that need urgent attention will be taken up first, issues like inclusion of natural gas along with other petroleum products and merging of the 12 per cent and 18 per cent slabs will be discussed in subsequent meetings as they are high up on this government’s agenda,” said an official.

Last month, the Delhi High Court had directed the Central Government to review the tax structure for solar power projects. The government had provided a deemed valuation provision that entailed taxing 70 per cent of contract value as goods, taxable at 5 per cent, and balance 30 per cent as services, taxable at 18 per cent.

“We are doing consultations with the Central Board of Indirect Taxes and Customs (CBIC) and the ministry of new and renewable energy,” said another government official.

The Council may also take up the case for extension of the NAA’s tenure, which is coming to an end in November. The NAA Chairman B N Sharma has informally asked for an extension due to pending cases. The Council has asked the NAA for data on the number of orders passed and the status of pending cases to come to a decision on extension.

“There are two views. One is that the NAA should get a finite extension with a fixed timeline to clear cases, as was the objective initially. The other view is that the NAA may be needed for a longer time as certain items like petroleum and alcohol are yet to be brought under the GST ambit,” said a government official.

According to the anti-profiteering rules under GST, “benefits of input-tax credit should have been passed on to recipients by way of commensurate reduction in prices”. The authority is still catering to complaints related to the rate reductions made in July last year on a number of consumer durables and on 178 items in November 2017.

With GST shortfall in 2018-19, the Council would also discuss ways to improve revenue by preventing leakages. In April, the collections crossed ~1 trillion for the third time in four months.

The proposal is to levy an 18 per cent GST on ENA as the pharma industry is unable to avail input-tax credit on the same. Alcohol for consumption and potable alcohol is constitutionally out of GST, whereas its input,  ENA, had been a grey area. Industrial alcohol is within GST. The Centre has taken a view of additional solicitor general, who has pointed out that ENA is liable to GST as it is not potable alcohol.