Proposed GST council unacceptable to Tamil Nadu, Jayalalithaa tells Modi

CHENNAI: Tamil Nadu chief minister J Jayalalithaa has opposed Centre's move to set up a goods and services tax (GST) council as the functions assigned to it will override the supremacy of the legislature -- both at the Centre and in the states -- in taxation matters.

"It is unacceptable to Tamil Nadu," she said in a letter to Prime Minister Narendra Modi.

The chief minister said the Constitutional Amendment Bill on GST did not include enabling the provisions for states to levy higher taxes on tobacco and tobacco products. The states should continue to be allowed to levy higher taxes on tobacco and tobacco products, she added.

Jayalalithaa reiterated her earlier request that petroleum and petroleum products be kept outside the purview of GST.

According to her, manufacturing states like Tamil Nadu stand to permanently lose substantial revenue if GST was implemented.

It was imperative that an independent compensation mechanism for revenue losses suffered by the states should be enshrined in the Constitution itself and not reduced to an instrument of Union policy which may change from time to time.

There should be a "broad consensus on key and contentious issues like dual rate bands, taxation threshold, IGST [innovative way of handling inter-state transactions] model and commodities to be excluded from GST," she said

There should also be a consensus among states and the Centre on dual administrative control, compensation period and methodology before the enactment of the Constitutional Amendment Bill on GST, she added.

The chief minister said she was happy to note that the revised draft amendment bill circulated to the states in June had addressed some of her concerns relating to removal of Declared Goods and alcoholic liquor for human consumption.

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