GST deadlock continues over high sea taxes

While April 1 rollout schedule has long been ruled out, nonBJP ruled states put the new implementation schedule not before September. Jaitley was non-committal on the roll-out dates saying “we know the  difficulty, we are moving against time”. 

The next meeting of the GST Council on Jan 16 would discuss the issue of jurisdiction over assessees as well as try to reach a finality on taxation of territorial waters. 

“The IGST law, having 11 chapters, was discussed on Wednesday. The initial 10 chapters have been approved and some issues remain open because they are in the process of being discussed. We will be meeting again, because the nature of discussion was inconclusive, on January 16 and have a seating to conclude the discussion on those specific points,” he told reporters here. 

Stating that the issue of territory is a complex issue, Jaitley said the area within 12 nautical miles into the sea is an Indian territory and a question is whose territory is it. 

“Conventionally service tax and customs are charged by Government of India  in those areas. Some states had, as far as fishing business is concerned the Constitution provides for fishing rights to states in that area. Some  states have been levying taxes in the nature of sales tax/ VAT,” he said. Jaitley said since states have been levying these taxes, they want to continue to levy them, but the contra argument is that high sea area strictly doesn’t fall within the definition of state and as per Constitution is an Union Territory. This issue is currently before the Supreme Court.