Ministerial panel on IGST settlement re-constituted sans FM

Shishir Sinha New Delhi | Updated on December 09, 2019 Published on December 09, 2019

But the committee will submit its report to her

Finance Minister Nirmala Sitharaman will not be part of the Group of Ministers (GoM) to examine the issue of IGST (Integrated Goods & Services Tax). The GST Council has issued a new office memorandum (OM) for reconstituting the GoM.

The GoM will examine the status of the IGST amount that remains un-apportioned as on March 31, 2018 as per the extant legal provisions and what action needs to be taken. The outcome of the discussions in the GoM will be submitted to the Finance Minister who is also the ex-officio Chairperson of the GST Council.

According to the OM dated December 7, the reconstituted GoM will have Deputy Chief Minister of Bihar Sushil Kumar Modi as the Convenor. The earlier OM, dated December 4, had mentioned Sitharaman as the Convenor of the GoM.

The number of Members of GoM has come down to six, which includes Puducherry’s CM V Narayansamy, Delhi’s Deputy CM Manish Sisodia, Chhattisgarh’s Minister for Commercial Taxes TS Singh Deo, Odisha’s Finance Minister Niranjan Pujari, Punjab’s Finance Minister Manpreet Singh Badal and Tamil Nadu’s Minister for Fisheries & Personal and Administrative Reforms D Jayakumar.

IGST is levied on inter-State supply (including stock transfers) of goods or services. It is levied and collected by the Central Government and apportioned between the Union and the States as per the provisions of the GST Act on the recommendation of the GST Council. Import of goods or services is also treated as inter-State supplies and subject to IGST in addition to the applicable Customs duties. States, especially the Opposition-ruled ones, allege that there are some challenges in settling the issue.

Reason for reconstitution

Both the OMs had one line in common where the reason for constitution/reconstitution was cited as “concerns expressed by the States of Punjab, Tamil Nadu, Union Territories of Delhi and Puducherry.” The issue was discussed during the 37th GST Council meeting held on September 20 in Goa, where it was decided to constitute a GoM. However, it took almost a month-and-a half to constitute the GoM and within 72 hours it was re-constituted.

The previous OM had mentioned that discussions at the GoM shall be submitted to the GST Council. Now, it will be submitted to the Union Finance Minister. Previous OM was issued with the approval of the Union Finance Minister but the new OM has used ‘Competent Authority’ for approval.

Compensation cess

The development comes at a time when States are concerned about the delay in payment from compensation cess. States claim total dues could be ₹50,000 crore or even more. Ministers and representatives from five States and one Union Territory (with Assembly) — Punjab, Rajasthan, Madhya Pradesh, Delhi, West Bengal, Kerala and Puducherry — met Finance Minister Sitharaman on December 4 to press for this demand. States also alleged that un-apportioned IGST had been used for paying compensation cess, which was not correct.

The issue is expected to be in focus during the 38th meeting of GST Council scheduled to take place on December 18.

Published on December 09, 2019

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