Let voting rather than consensus run GST council: Panel

NEW DELHI: Voting rather than consensus be the main means of arriving at decisions within the GST council, the standing committee on finance has suggested in its draft report on the Goods and Services Tax Bill (also known as the Constitution 115th Amendment Bill, 2011).

The report, which is to be adopted on Friday, also says that clauses in the Bill pertaining to the setting up of a GST Dispute Settlement Authority should be omitted, as "this body would have the effect of overriding the supremacy of Parliament and the state legislatures."

Instead the panel's draft report proposes that the GST Council be empowered to decide the modalities of dispute resolution, rather than enshrining it in the Bill. The panel also felt that while there would likely be diversity in socio-economic interests of the states, "achieving a consensus is likely to be very difficult."

Thus a system of voting has been recommended for the same. "As agreed upon by the Empowered Committee, one third weightage for central representatives, and two thirds for state representatives may be provided with the decision of the council to be passed by three-fourths vote to be acceptable," the report suggests.

The GST council itself is to be structured like the present empowered committee of finance ministers and generally work with the spirit of mutual cooperation.

The report also recommends that entry tax in general should be subsumed under GST, so as to empower the states to collect entry tax for distribution to local bodies instead of leaving it to be collected by different local bodies.

A very significant recommendation of the GST report is the adoption of a "band of floor rates" of tax on sale of goods.

"The committee is desirous that a system of band with floor rates should be adopted so that states have some elbow room within stipulated limit to calibrate the rate of tax depending on the needs of the situation and the dynamics of circumstances."