The coastal states, irrespective of parties, insisted on rights to levy Goods and Services Tax on trade of goods within 12 nautical miles offshore, holding up finalising of the draft law for levy of IGST on inter-state trade
NEW DELHI: The Goods and Services Tax (GST) Council faced a new roadblock with state Finance Ministers demanding taxation rights for GST levy on trade of goods within 12 nautical miles of the shore. Chairman of the GST Council and Union Finance Minister Arun Jaitley agreed to seek legal opinion on its Constitutional validity.
The states also sought an increase in the number of items on which cess is to be levied to compensate the states, to deal with revenue loss estimated at Rs 90,000 crore post demonetisation, up from Rs 55,000 crore estimated earlier.
Most states have seen revenue decline of up to 40 per cent, the officials representing states claimed. The coastal states pressed for rights to levy GST on trade of goods within 12 nautical miles offshore. This resulted in a stalemate in finalising of the draft law for levy of Integrated-GST (IGST) on inter-state trade. Currently states like Gujarat, Karnataka, Kerala, Maharashtra, West Bengal and Odisha charge a VAT or sales tax within 12 nautical miles.
“All the coastal states, irrespective of parties, combined in saying that we must have 12 nautical miles within the state jurisdiction. Whereas the draft IGST law was looking at having taxation rights with the Centre,” West Bengal Finance Minister Amit Mitra said adding that some states earn as much as Rs 600 crore and Gujarat gets Rs 1,200 crore revenue from taxing sales in high seas. However, the issue on control of assesses will be discussed on Wednesday.