NEW DELHI: After a hue and cry over the imposition of GST on pre-packed and labeled food items, Finance Minister Nirmala Sitharaman on Tuesday said the decision was taken only after a consensus on the matter among states including non-BJP ones.
In a series of tweets, she stated that the tax was imposed in order to prevent misuse of the earlier provision, as per which only those items were taxed that were sold under registered brand or brand on which enforceable right was not foregone by the supplier.
“…a rampant misuse of this provision was observed by reputed manufacturers and brand owners and gradually GST revenue from these items fell significantly. This was resented by suppliers and industry associations who were paying taxes on branded goods. They wrote to the government to impose GST uniformly on all packaged commodities to stop such misuse. This rampant evasion in tax was also observed by states,” Sitharaman said.
The Fitment Committee consisting of officers from Rajasthan, West Bengal, Tamil Nadu, Bihar, Uttar Pradesh, Karnataka, Maharashtra, Haryana and Gujarat had also examined this issue over several meetings and made its recommendations for changing the modalities to curb misuse, the minister said.
“All states including non-BJP ones – Punjab, Chhattisgarh, Rajasthan, Tamil Nadu, West Bengal, Andhra Pradesh, Telangana, Kerala agreed with the decision. This decision of the GST Council is yet again with the consensus,” Sitharaman further said, adding that the Group of Ministers (GoM) which recommended the changes comprised members from non-BJP states.
The minister also clarified that this is not the first time such taxes are imposed on such food articles. States were collecting significant revenue from food grain in the pre-GST regime.“Taking this into account, when GST was rolled out, a GST rate of 5% was made applicable on branded cereals, pulses, and flour. Later this was amended to tax only such items which were sold under registered brand or brand on which enforceable right was not foregone by the supplier,” Sitharaman stated.
Tax imposed to prevent misuse: FM
Tax was imposed to prevent misuse of the earlier provision, as per which only those items were taxed that were sold under registered brand or brand on which enforceable right was not foregone by supplier, says FM