New Delhi, Jan 16 (PTI) Industry association CII hasasked the government for inclusion of oil and natural gas inthe new Goods and Services Tax (GST) regime at the earliest.
The GST was rolled out from July 1, 2017 by subsumingmost of the Central and State indirect taxes into a singletax. But, crude oil, natural gas, diesel, petrol and ATF havenot been included in the ambit of GST as of now.
The Confederation of Indian Industry (CII) said till suchtime that the five are included in GST, C Form should becontinued to avoid high tax incidence on these products.
"Though the understanding is that the previous VAT andCST rules would continue to apply to the excluded products,however, the related sectors continue to incur huge GST impacton all inputs without any set-off, as sale of crude oil andnatural gas are outside the purview of GST and are subject toexisting OIDA (Oil Industry Development Act) Cess, CentralSales Tax Act and State Value Added Tax," CII press releasesaid.
As per the earlier provisions of CST Act, a purchaser canmake the interstate purchase of the non-GST goods by availingconcessional central sales tax rate of 2 per cent againstForm-C.
Hitherto, fertiliser manufacturers, power producers,automobile manufacturers and other industries were buyingnatural gas and other petroleum products by paying CST of 2per cent against Form-C.
"However, after introduction of GST, credit on VAT paidon petroleum products, including natural gas, is not availableand the amendment of the CST act has significantly alteredinter-state sale of the products.
"Therefore, post GST, there has been an increased taxcost on the products, which was not the intent of thegovernment," CII said.
The central government vide Taxation Laws Amendment Act2017, amended the definition of 'Goods' under the CST Act toinclude only crude petroleum, diesel, petrol, ATF (aviationturbine fuel), natural gas and alcoholic liquor for humanconsumption.
"Consequently, certain State Commercial Tax Departmentshave taken a narrow interpretation that the concessional rateof 2 per cent against C Forms can be availed only if thespecified goods are used for resale, or manufacture of thesame goods and not for manufacture of any other goods, or intelecommunication, or mining, or generation of power," itsaid.
This meant that fertiliser companies are not eligible forC Form as the gas is used to manufacture urea and not formanufacture of natural gas.
Likewise, automobile manufacturers are not eligible for CForm for inter-state purchase of diesel, petrol or naturalgas, which they have to mandatorily fill in the tanks of newvehicles.
Also, if purchasing dealer is not engaged in inter-statesupply of goods (as defined under the CST Act), then he willnot be liable for registration and thus not eligible for theissuance of Form-C which imposes an additional tax costburden, CII said.
The industry association said post GST, since Form-C isnot available for inter-state purchase of goods and so theextra tax burden will be shifted to the consumer.
It suggested that petroleum products, natural gas,electricity, alcohol and real estate should be covered underGST.
"This will ensure that the input taxes receive set-offcredits and there are no stranded costs," CII said, addingthat the practice of issuance of C Form under CST law shouldbe continued till petroleum products are covered under theGST.
Alternatively, since VAT is non-creditable tax, VAT rateshould be reduced to 4 per cent or lower which was theeffective rate when credit on VAT was available before July 1.
PTI ANZBAL.
This is unedited, unformatted feed from the Press Trust of India wire.