In a letter to Arun Jaitley, West Bengal finance minister Amit Mitra says Centre concealed crucial information on service taxpayer base from states.
While the states had so far been led to believe that the service taxpayer base was 1.1 million, new data supplied to the state finance ministers reveal that it is actually 3.05 million—almost thrice of what was assumed so far. This, Dr Mitra argues, has unfairly influenced the discussions, especially on the sharing of administrative powers between the Centre and states.
The sharing of administrative powers between the Centre and the states for controlling traders and service taxpayers in a GST regime has been a point of contention.
After the first meeting of the GST council, it was concluded that the Centre will control all the existing 1.1 million service tax dealers. In the case of goods, it was agreed that goods traders with an annual revenue threshold of less than Rs 1.5 crore would be administered by states and anything above jointly by the Centre and states.
However, in the second meeting of the GST council, the states demurred, claiming the minutes of the meeting did not adequately reflect what was discussed; this forced the council to go back to the drawing board on the administrative control of both goods and services.
“The minutes of the 1st and the 2nd GST council meeting clearly records a tax base of around 1.1 million for service taxpayers,” Dr Mitra wrote in a letter dated 28 October, before adding, “Suddenly, we find that the service taxpayers number has escalated to 3.05 million out of which 2.64 million are shown as active taxpayers.”
“This implies that the service tax base has grown 3 times over 2 years. What is even more surprising is that even a month ago this fact was not told to the states,” he wrote, adding that the figures seem an afterthought, surfacing only after the issue of dual control was discussed in the last GST council meeting held on 18-19 October.
In his letter, Dr Mitra also pointed out that the disaggregated data of value-added tax (VAT), excise and service tax base based on thresholds of Rs 1.5 crore and Rs 20 lakh had not been shared with the states so far. He also added that the states were likely to get the updated data on the taxpayer base only by 1 November, which left them only a day to deliberate before the GST council meeting. The data shared with states by the GST council secretariat was updated as of 19 January 2016.
