Fuel prices won’t come down under GST: Adhia – Business Line

Hasmukh Adhia has seen it all. The Union Finance Secretary has been in the thick of all things to do with the GST: from rate slabs to technical glitches. In an interview with BusinessLine, the Gujarat cadre IAS officer, who also holds charge of the Revenue Department, spoke with candour as he tried to dispel the notion that bringing petrol and diesel under the GST’s ambit would lower their prices. Excerpts:

On criticism over the government’s lack of preparedness for GST

I don’t agree that we were not well prepared. In any new system, there will always be certain things that come to notice only when they are implemented. So as we learnt, we made changes. Those changes were made dynamically in response to public demand, and this has made our system very, very robust. Our willingness to make quick changes and the fact that we did in such a record time itself helped us in stabilising the GST [system] in such a short period. Today, it is at almost 90 per cent satisfaction level.

On lessons learnt

The key learning is that if there is political will and if the officers are willing to put in their best, wonders can be done. GST seemed to be such an impossible task, something for which the country was struggling for 10 years. It had to be converted into real possibility and today that has happened.

What next?

In six months, we aim to put in place the simplified single return. Secondly, of course, there are certain minor changes required in the legislations. We already have one round of approval from the GST Council but final draft is will be placed in the next meeting on July 21.

On different rulings by different AARs on same issue

It is not possible to have of a single Authority for Advance Rulings for the entire country. There are too many cases; so the first level of authority has to be at the State level. All we can think of, which the Council should think of, is that at the appellate level, there should be a centralised authority with multiple benches. So, if one party registered in two States is doing the same business, and they get different judgments in two State AARs, they can then go to a single appellate authority and get it reconciled.

On lowering GST rates on goods with high perception value but less revenue implication

The fitment committee is working on all those sensitive items for which there has been a demand. If the committee has to make any recommendations, they will come before the GST Council in the next meeting.

On a timeline for the end of multiple rates

Currently, we have a four-fold rate structure. I would want the revenue to stabilise before we tinker with the rate structure.

‘One Nation, One Tax’ has to be our aspiration, but when, and after how many years, I can’t say. We should reach that level, yes. At present, with the kind of economic inequality in India, it does not seem to be an immediate possibility.

On petrol and diesel under GST lowering prices?

It is unlikely, because for reducing the prices of petrol and diesel, somebody will have to sacrifice the revenues they earn from it. If both the Centre and the States are willing to make the sacrifice, [that is, to] go for one rate without additional burden like cess, then yes, it will lower the price [of the fuels]. But having made our budgets, are we in a position to let go of the revenue?

Amendment in constitution prescribes that petroleum products can be brought under GST and excise as well as VAT will continue on them. Now GST Council can decide when to bring petrol and diesel under GST.

We have two possibilities: one is to bring these [prices of petrol and diesel] under the GST in some rate slab and continue with VAT (Value Added Tax) and excise; the second is that you don’t have any excise and VAT, but some slab and then cess, not for compensation, but to be shared between Centre and States. We also have a provision for additional excise duty on petroleum products.

There is the possibility of having a tax structure more complicated then what it is now. Besides, If Central Excise and VAT added to GST, then what is the benefit of bringing them (the fuel prices) into this regime? This system may serve the purpose of manufacturers, as they will get input tax credit, but it will have cascading effect on consumer.

Consumers will benefit only if both Centre and States decide to settle for lower income from petrol and diesel.

via Fuel prices won’t come down under GST: Adhia – Business Line

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