GDP may slow down if GST implemented in hurry

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New Delhi:¬†Claiming that demonetisation has affected country’s growth, a major central revenue body has asked Finance Minister Arun Jaitley not to implement Goods and Services Tax (GST) in a hurry and threatened to take legal recourse in case their concerns are not addressed.

It termed as “illegal” certain decisions taken by Jaitley-headed GST Council and demanded that they be corrected.

It also sought that the officer’s body be consulted before any final decision is taken.

The Council in its meeting on January 16, had agreed to give states the powers to levy tax on economic activity within 12 nautical miles of territorial waters.

Also, it was decided that the states will have powers to assess and administer 90 per cent of the tax payers under INR 1.5 crore annual turnover, while the remaining would be controlled by the Centre.

In a letter to Jaitley, the All India Association of Group B Central Excise Gazetted Executive Officers, said the decision to transfer 90 per cent of service tax assessees to states is not supported by any lawful and logical base and therefore, the decisions taken by GST Council should be withdrawn immediately.

“Needless to say, any judicial intervention in the illegal decisions taken by GST Council, and if implemented by the Centre, would cause unnecessary delay in the implementation of Goods and Services Tax (GST).

“It is further added that due to demonetisation of old bank notes of INR 500 and INR 1,000, the GDP of the country is expected to fall at least 1 per cent (from 7.6 estimated to 6.6 per cent, as reviewed), and in case implementation of GST is delayed further, due to judicial scrutiny of the illegal decisions taken by GST Council, the country may suffer economically as the GDP may further slow down,” it said.

It said the GST Council has not been conferred upon any power by the Constitution to recommend transfer of rights or allowing levy and collection of IGST (which deals in levy on inter-state supply including stock transfers of goods or services) to states.

It said the area in sea (territorial waters) up to 12 nautical miles from the coastline falls within the territory of India and therefore, the powers to tax transactions in such areas are vested in the Union Government.

“The decision taken by the GST Council to empower states to levy state GST or central GST or IGST, as the case may be, is in gross violation of the constitutional provisions,” the association said.

The GST is likely to be rolled out from July 1, as against April 1 decided earlier by the government.

There is no logic or rationale, legally, to transfer the 90 per cent GST assessees to states for the purpose of audit and assessment, it said.

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