CHENNAI: Tamil Nadu government has “vehemently” opposed the proposal to raise the Goods and Service Tax on coconut oil, terming the move as anti-poor and anti-Southern states, where the bulk of coconuts are grown. State Finance Minister Palanivel Thiaga Rajan, who was unable to attend Friday’s GST council meeting, made a written submission in which he hit out at the move to classify coconut oil as edible and non-edible based on the size of the container to levy GST.
The GST Fitment Committee recommended coconut oil, when packed and sold in a unit container of less than 1000ml, may be classified as hair oil attracting a GST of 18 per cent irrespective of its actual end use. Coconut oil, when packed and sold in a unit container of 1000ml or above, would be considered “edible” and subject to the GST of five per cent.
Slamming the recommendations as against the interest of TN, one of the largest producers of coconuts and coconut oil, and other southern states, Rajan asked, “How can you classify something which is clearly edible as effectively non-edible (based on the size of the container) for the sake of levying GST?... It is an arbitrary cut-off point, bereft of human compassion and basic logic.”
The minister asked why coconut oil was singled out for this treatment compared to other edible oils with multiple uses, such as mustard or gingelly oil. “What about imported oils such as palm oil or olive oil, which the Centre in its wisdom has chosen to exempt from Import Duties?” he asked.
The minister also opposed bringing petrol and diesel under the ambit of GST. “Taxation of petrol and diesel remains one of the last vestiges of any State’s right to manage their own revenues, since the advent of GST stripped away most of the small range of rights originally written into the Constitution. As such we are reluctant to give up any of these few remaining rights, and so are fundamentally opposed to bringing these products into the ambit of GST,” said Thiaga Rajan.
TN also opposed a proposal to levy 18 per cent cess on job work services provided by contract manufacturers to the brand owners for manufacture of alcoholic liquor for human consumption. “...the proposed increase would curtail the fiscal room available to States to vary the tax on alcoholic liquor for augmentation of revenue,” Rajan said.