Says, Decision will Open Door to Transitioning Petroleum Products from VAT to GST
Demands to consider 2015-16 as base year for fixing states share in ‘Negative IGST Settlement’
Chandigarh, December 23
Punjab Finance Minister Advocate Harpal Singh Cheema has strongly opposed the agenda of bringing Air Turbine Fuel (ATF) under the ambit of Goods and Services Tax (GST), emphasising that including ATF under GST would pave the way for removing petroleum products from the Value Added Tax (VAT). He raised this concern during the 55th meeting of the GST Council held in Jaisalmer, Rajasthan, under the chairpersonship of Union Finance Minister Nirmala Sitharaman.
Revealing this in a press communiqué issued here today, Finance Minister Harpal Singh Cheema said that this decision would be detrimental to the states already suffering losses due to the GST regime. He highlighted that Punjab has earned Rs 113 crore in FY 2022-23, Rs. 105 crore in FY 2023-24, and Rs 75 crore till November in the current fiscal year as VAT on Air Turbine Fuel.
Finance Minister Cheema further sought compensation for the Rs. 20,000 crore loss incurred by the state due to the implementation of the GST regime. He warned that once the door to transitioning petroleum products from VAT to GST is opened, states would face an unbearable fiscal crisis. He pointed out that Punjab’s VAT collection on petrol and diesel has been substantial, with Rs 3,600 crore on diesel and Rs 1,800 crore on petrol in FY 2022-23, Rs. 4,400 crore on diesel and Rs. 2,300 crore on petrol in FY 2023-24, and Rs. 3,400 crore on diesel and Rs. 2,000 crore on petrol till November in the current fiscal year. Finance Minister Cheema emphasized that this VAT collection is crucial for the financial health of the states.
On the issue of ‘Negative IGST Settlement’, Finance Minister Harpal Singh Cheema advocated that the GST regime imposes a sudden burden on the states. He urged the Union Government to consider the base year 2015-16, instead of the preceding year, for fixing the states share. Furthermore, Cheema advocated for making the Compensation Cess a continuous process, linking it to capital expenditure to enable states to build their infrastructure.
Punjab has also extended strong support to Andhra Pradesh’s demand for extending the levy of Disaster Cess to the tune of 1 percent for two more years on intra-state movement of goods to provide support to flood-affected areas. Punjab Finance Minister suggested that it should be a continuous feature to help the states facing natural disasters. Meanwhile, Finance Minister Harpal Singh Cheema also welcomed the changes being introduced in the registration process, stating that these measures would significantly curb the proliferation of bogus dealers.
Additionally, Finance Minister Cheema brought to the attention of the GST Council that removing clause (b) of section 13(8) of the GST Act would bring intermediary services provided on behalf of offshore clients under the exemption, which should not be allowed. The council has deferred this agenda item for further deliberation. The agenda for providing exemption on health and medical insurance premiums has also been deferred following a dissenting note by Punjab.
