The GST council meeting on the inclusion of petrol and diesel under the GST decided against its inclusion given the high revenue implications and fiscal constraints induced by the Covid pandemic, according to a statement filed before Kerala the High Court by the Central Board of Indirect Taxes and Customs(CBIC).
The court had last time directed the CBIC to state the genuine reason why the petroleum products could not be brought under the GST regime when public interest litigation seeking to include them under the GST came up for hearing.
In the statement, the CBIT said that the GST council, at its 45th council meeting after due deliberations on the subject, decided that it was not appropriate to bring petroleum products under the GST regime at the current stage. The GST Council Secretariat had informed the Centre that the council believed that the matter involved higher revenue implications and required more extensive deliberations. When the Covid pandemic induces fiscal constraints, bringing petroleum products under the GST regime would be difficult.
The statement added that it was a conscious decision of the GST Council to keep petroleum products outside the GST regime at this stage. These products yield significant revenue for both the Centre and states.
The Centre and the States are extending stimuli in all areas for the economy to recover from the disruptions caused by Covid-19.Tax revenues are required to ensure that the socio-economic initiatives undertaken in the larger public interest were not adversely affected.
The GST council had been empowered by the Constitution of India under Article 279A to recommend the date on which the GST could be levied on petroleum products. Thus, the recommendation to bring the petroleum products under the GST was left to the discretion of the GST Council which was represented by the Centre, States and union territories.
It said that the council’s recommendations were based on decisions taken after following the procedure under 279A of the Constitution.