GST Council agrees to maintain status quo on taxing ATF by States: Bhatti

Bhatti, who was also the Finance Minister, attended the 55th meeting of the GST Council meeting chaired by Finance Minister Nirmala Sitaraman at Jaisalmer in Rajasthan on Saturday.

It was proposed in the meeting that Aviation Turbine Fuel (ATF) be brought under the tax net of GST. It is being taxed by the States under the relevant State VAT Acts. The Deputy Chief Minister opposed the proposal, as the States presently have very limited sources of generation of revenue.

Further, the ATF is derived from crude oil, which is presently taxed under VAT. Therefore, he requested the Council to maintain the status quo on the issue, which was supported by several other States. This was agreed by the Council.

The issue of the applicable rate of tax on delivery services by delivery partners, including the restaurant services, through electronic commerce operators was discussed in detail in the meeting. In view of the fact that these are intricate issues of taxation, and to ensure fairness in implementation etc., the Deputy Chief Minister suggested that the matter should be studied in further detail.

Therefore, he proposed to set up a Committee of Officers to examine the issue, and to take a decision based on its report. The Council has accordingly constituted a Committee of Officers, of which the Officers of Telangana are also included, to examine the matter and to submit a report.

On the issue of closure of Group of Ministers (GoM) on analysis of GST revenue constituted in the year 2019, Bhatti informed the Council that Telangana was in favour of recommending continuation of the Group of Ministers, by suitable reconstitution of the GoM as study of State wise and sector wise revenue is invaluable for taking informed policy decisions. Council agreed to the proposal put forth by the Deputy Chief Minister.

On the subject of recovery of excess ad-hoc IGST apportionment made in earlier years, the Committee of Officers (CoO) presented different options for recovery of the same. Bhatti informed the Council that the ad-hoc apportionment was done to States as per base rate of revenues for the FY 2015-16, but over time negative balances have accrued in IGST due to which recovery is proposed from States.

However, recovery is proposed based on revenues of the latest period which is not aligned with the formula of earlier distribution. The Deputy Chief Minister requested the Council that the recovery of excess ad-hoc apportionment done till now may be made based on the base rate of revenues for the FY 2015-16 which the Council agreed. He requested that the recoveries, if any, should be made only in the next financial year in order to prevent fiscal hardships to States at the fag end of the financial year.

During the meeting, Andhra Pradesh made a request to permit them to levy one per cent cess on B2B transactions in the State under GST to meet the expenses for re-construction and rehabilitation due to recent floods.

Bhatti also stated that Telangana also suffered extensive damages to the same calamity and requested for a similar arrangement to be extended to Telangana. On the recommendation of the GST Council, the matter has been referred to a Group of Ministers (GoM), in which Telangana has also been included.