States free to fix their own State GST rates

The Finance Minister, Mr Pranab Mukherjee, has told the State Finance Ministers that they are free to fix their own State GST rates, but hopes that they would not exercise this freedom after a consensus is reached in the GST Council. He, thus, has conceded a major demand of the States that the Union Finance Minister should not have the last word on the State GST rates.

Recommendatory Role

Respecting the primacy of the legislature in the area of taxation, Mr Mukherjee said that the GST Council will only have a recommendatory role. The revised draft of the Constitutional Amendment Bill now proposes that the decisions of the GST Council would be recommendations to the Union and the States.

“Since these decisions would be taken by consensus, it is for us to respect them and develop a healthy convention of abiding by them, as is the case with several other constitutionally mandated bodies,” Mr Mukherjee said in his address at a meeting with the Empowered Committee of StateFinance Ministers.

States Seek Postponement

Even as some State Ministers expressed reservations on the introduction of GST by April 2011 and advised further postponement, Mr Mukherjee asked the States to make all efforts to meet the timeline of introduction of GST by April 2011.

Dispute Settlement

On the GST Dispute Settlement Authority, Mr Mukherjee defended its establishment through the Constitutional Amendment Bill, stating that there should be a provision for setting up an independent and autonomous forum to resolve disputes arising on rate variations.
Source: taxguru.com