The First GST Council meeting held on 29th September 2016 was short lived and could only resolve certain area based exemptions, rules for registration of assessees and the refund mechanism.
The vexed issue of compensating states for the loss of revenue with GST coming in and fixing GST rates would be discussed in next meeting scheduled for October 18th to October 20th 2016. Finance Minister, Mr. Arun Jaitley reiterated that Government is committed for GST rollout by 1st April 2017
The contentious issues that led to the inconclusive GST Council meeting on 29th September 2016 are-
1. Finalizing Service Tax Assessment Method with dual control mechanism of states and centre as the assessees with turnover exceeding s 1.50 Cr are to be assessed by Centre. Certain states objected on ground that in certain industries as construction, the demarcation between goods and services is very thin and the state should have control over the assessment even with turnover going beyond Rs 1.50Crore. Even in entertainment industry, the turnover of Rs 1.50 crore is crossed very easily and these entities should be subject to assessment by state
2. Interpretation of Service Tax definition
3. Process to assess supply contracts
4. Issue of tax exemption already granted to North East and Hill States. In many cases, the exmption will continue to be valid till 2020 and in Northeastern states; the units coming into production by 2017 will continue to enjoy exemption till 2027. The process of taxing these entities is yet to be finalized
5. The process to simplify multiple returns as per present proposed rules as the businesses will have to file at least three monthly returns for each state and one annual return. E-commerce companies may have to file multiple registrations for states.
Though only two states were raising these objections, instead of going with majority, the government wanted consensus and hence it was decided that issued be concluded during 18th October meeting.