Madhya Pradesh chief minister Shivraj Singh Chauhan has shot-off a letter to Prime Minister Manmohan Singh expressing concern over the Centre?s ?haste? in pushing the goods and services tax Constitutional amendment Bill in Parliament. The Bill was introduced without fully addressing the concerns of the states, Chauhan alleged.

In what exposed the continuing wide divide between the Centre and the states over the indirect tax reform initiative, Chauhan said the Bill in its current form would severely impact the fiscal autonomy of the states. The Madhya Pradesh government is against Centre having a share in the proceeds of VAT and other local levies, which are in the domain of the states. It believes that GST in the form proposed by the centre would hamper the states? autonomy.

Instead, the state government floated an alternative model, under which states should be allowed to levy service tax in the initial stages, before shifting to the GST regime. The levy of service tax is currently in the domain of the Centre. However, the proposal was turned down by the Centre on the grounds that it does not allow the essential features of GST to operate.

In the Budget session this year, the government introduced GST constitutional amendment bill in Parliament to confer simultaneous powers on the Centre and states to levy taxes on goods and services.

The proposed GST will subsume most indirect taxes like excise duty and service tax at the central level and VAT on the state front, besides local levies. The constitution amendment is necessary as a number of taxes fall in the states? purview, while some come under the Centre?s ambit. The Bill has to be passed by a two-thirds majority in both Houses and ratified by at least 15 state Assemblies to take effect.

The implementation of GST has been hanging fire from the last four years, mainly due to opposition by BJP-ruled states. The Centre expects GST to be implemented by April 2012 but sharp differences remain with states over several issues.

To bring in more consensus among the states, finance minister Pranab Mukherjee recently elected Bihar deputy CM Sushil Modi, who is from BJP, as chairman of empowered committee. However, it has failed to evolve consensus among the states.

In the last meeting of empowered committee of state finance ministers, Madhya Pradesh, along with Gujarat and host of other states continued to oppose the GST structure.