Former Maharashtra Chief Minister Prithviraj Chavan has claimed that the Union Finance Ministry made an “error” while notifying the date of applicability of various sections of the GST Constitution Amendment Act in the state.
Describing the decision of making Section 17 of the Act effective from September 16 (midnight of September 15/16) as an “unprecedented blunder”, he said the Local Body Tax (LBT) and Octroi collection (in Maharashtra) must stop forthwith and taxes collected since September 16 be returned.
Chavan’s remark came even as the Union finance ministry yesterday made it clear that there is no “legal infirmity” in the notifications issued by the government with regard to the GST Constitution Amendment Act.
Some experts had raised doubt about the legality of levying excise duty by the Centre on various commodities till implementation of GST from April 1, 2017, after the government on September 16 notified certain provisions of the Act.
Claiming that the Finance Ministry was implementing the GST in a “haste”, Chavan said there were “grave implications” in the decision.
He was speaking during during a panel discussion on the impact of the adaptation of GST on the economy of the state — organised by the Economics Department of Mumbai University, with Maharashtra Finance Minister Sudhir Mungantiwar also attending the event.
Section 17 of the Act makes union excise duty applicable only on petroleum and tobacco products. “That means no excise duty can be collected on any manufactured excisable item with effect from midnight of September 15/16. Excise duty collected after September 16 is constitutionally illegal,” Chavan said.
He claimed that omission of entry 54 (in the notification) makes Octroi collected by the Municipal Corporation of Greater Mumbai after September 16 “illegal”. Also, the local body tax (LBT) applicable to units with a turnover more than Rs 50 crore in the state and entry tax in other states becomes illegal.
Mungantiwar said the error would be rectified and added that GST was a major step towards transformation of economy and the state law will be enacted after discussion with all stakeholders.
Mungantiwar also refuted as “baseless” the speculation that GST would lead to inflation, the rate of the taxes will increase and the autonomy of the local self government institutions would be threatened.