The Finance Minister, Mr Pranab Mukherjee, has decided to specifically exclude alcohol (for human consumption only) from the GST net, but include print media in it.
He also wanted natural gas, diesel, petrol, crude oil and Aviation Turbine Fuel (ATF) to be excluded.
These proposals are contained in the Constitutional (115th Amendment) Bill 2011 that seeks to facilitate dual Goods and Services Tax (GST) system. This Bill was introduced by Mr Mukherjee in Lok Sabha on Tuesday.
By specifically mentioning the exclusion or inclusion of these items under the GST net at the level of the Constitutional Amendment Bill itself, the Centre seeks to ensure that the proposed Goods and Service Tax Council (GST Council) would not have any room to make recommendations on these items, say Constitutional and tax experts.
With tobacco and tobacco products not specifically excluded from the GST net at the Constitutional amendment Bill level, there is a possibility of GST being levied on these items, according to tax experts. The Constitutional amendment Bill retains tobacco and tobacco products in the Union List for excise duty purposes.
The specific exclusion of natural gas, petrol, high speed diesel, crude petrol, alcohol for human consumption and ATF from GST will come as good news for most States as they want to retain fiscal autonomy over these items through levy of sales tax and State-level excise duty (alcohol).
This may, however, not be to the liking of the industry which wanted crude and petroleum products to come under the GST net.
Meanwhile, the passage of the Constitutional amendment Bill may not be all that difficult given that the Centre has climbed down on most of the contentious proposals relating to the GST council and also on the GST Settlement Authority.
Putting to rest concerns that Union Finance Minister will have veto power on GST rates, the Constitutional Amendment Bill states that “every decision of the GST council taken at a meeting shall be with the consensus of all the members present at the meeting”.
The GST Council will be set up through a Presidential order and the Union Finance Minister will be the Chairperson.
Besides the Minister of State for Finance in charge of revenue, the other members of the Council are the Minister in charge of Finance or taxation or any other minister nominated by each State Government.