Basic Plot of GST Lost: Levy of Additional Tax in GST @1% parallel to Present CST
The Government has proposed to Levy 1% Additional Tax in GST on Inter-State Supply of Goods. This Additional Tax would be levied to offset the losses of the States primarily Manufacturing States due to removal of CST. This Additional Tax would not be creditable and would not be allowed as Credit against the Output Tax Liability under CGST, SGST and IGST. This Tax would be levied initially for first two Years of GST.
Therefore, the Ghost of CST in the form of Additional Tax has come again to haunt us and would only lead to the same complexities and irrationality as are being present today. The States never lose their affinity and Love towards the Central Sales Tax as it has been regularly being proposed for the last 20 Years to scrap CST but it has not been done till date. At the time of proposal of implementation of GST and VAT, it was proposed that Central Sales Tax would be removed but it would be still there to haunt is and in the name of Additional Tax under GST.
Further It would be appropriate here to highlight that returns provide following remarks everywhere for Additional Tax:
“Not applicable to services and intra-state & specified inter-state supplies of goods”
Therefore, lawmakers are seeking the additional tax to be levied on inter-state trade of goods and I repeat goods only. Therefore, as a taxpayer I have to get ready again to ascertain what goods are and what are services. In continuation of the earlier paragraph, this would be resulting in the entire classification issue of goods and service being raised again. We are opening a Pandora’s box which would be difficult to settle. It seems strange that none of states are ready to lose revenue and are so hooked to their part of revenue that they lose sight of public interest of entire nation. What this revenue would serve is not known to me but what it would lead would be complete defiance of the GST Structure.
The entire concept of GST has made to go for a tailspin and would only result in start of another series of deviation from the basic concept which we had seen at the time of Implementation of VAT wherein initially the List of Tax Rates on Goods was sought to kept the same all throughout the Country and once the exception was allowed, the result is for every body to see resulting in every state charting their own Tax Rate Structure.