Daily dose of GST update on Control dispute between centre and state

GST Update 05.11.2016

Daily dose of GST update:- Control dispute between centre and state

The dispute is going among centre and state in respect of control of assessees. The trade and industry has demanded that they want single jurisdiction and not dual control as suggested in GST draft law.
In the first meeting of GST council, it was decided that traders having turnover of less than Rs. 1.5 crore will be controlled by the State government as these are under their jurisdiction in current VAT regime also. On the same analogy, the centre said that the service tax assessees will be assessed by Central Excise department only. The assessee having turnover more than Rs. 1.5 crore will be looked after by both state VAT department and Central Excise authorities under proposed GST regime. The manufacturers having turnvoer of more than Rs. 1,5 crore were already registered with VAT as well as Central Excise department, Hence there was no problem with them for dual control. But the traders having turnover of more than Rs. 1.5 crore are registered with VAT authorities in current scenario but now they will controlled by Central as well as State authorities.
Even the experts were also in favour of such control by Central and state authorities. As service tax providers are being handled by central authorities for last 20 years and they have expertise to handle them but the state taxing authorities does not have such expertise but they can handle VAT assessees. Hence, they can handle them. But there are assesses who registered with both state VAT as well as service tax authorities. Mostly VAT assessees pays service tax under reverse charge and hence are registered with the service tax department also. The services like works contract fall under both jurisdiction. Hence, there will be dispute on division of assesses. Even the traders may cross the limit of Rs. 1.5 crore. Earlier they were being assessed by state authorities and after crossing the limit, both by Centre and state authorities. They will be administrative difficulties in implementing the same.
But this consensus did not last for more time. In next meeting itself, the state finance ministers opposed the move that service tax assessees will be looked after by central authorities only. They wanted that the control should be given to them also. Even the association of Central employees as well as state employees opposed this bifurcation of GST assessees. They are of the view that this will hamper their promotion prospects.
Thereafter, no solution could be found of this issue in next GST meetings. In the recent last meeting, the power struggle continued. When the state finance ministers are reopening the issue of service tax assessees, the centre has also reopened the issue of division of manufacturer/traders below Rs. 1.5 crore. But they agreed to concept of one assessee-one authority but no solution could be found for the distribution of assessee between centre and state. After evaluating many options, the two sides have shortlisted two — a mutually acceptable formula for horizontal division of the assessee base between the Centre and states and a vertical, 1:2 split.
Although it was decided that the union and state finance minister will meet unofficially on November 20 to find out any solution to the problem politically and this view will be finalised in GST council meeting on 24-25 th November.
We have found a very good comment on the same situation on whatsapp groups. " Those who intend to control the GST are fighting with each other for their area of control. But those who are to be controlled are sleeping.

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GST Update 05.11.2016

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