The committee headed by Bihar’s Deputy Chief Minister Sushil Kumar Modi has to submit its report by October 31. The committee headed by Bihar’s Deputy Chief Minister Sushil Kumar Modi has to submit its report by October 31.

The Goods and Services Tax (GST) Council in its 30th meeting on Friday decided to form a seven-member ministerial group to examine the modalities for revenue mobilisation in case of natural calamities and disasters such as the recent floods in the state of Kerala. The committee headed by Bihar’s Deputy Chief Minister Sushil Kumar Modi has to submit its report by October 31.

The Council broadly agreed to discuss the legality of such a levy at national level and not restrict it to one state. Kerala had demanded levy of a special cess on State GST (SGST) to raise revenues in the aftermath of floods in the state.

Union Finance Minister Arun Jaitley said that such an issue cannot be decided at the spur of the moment since it will set a precedent for the long run and Kerala’s Finance Minister Thomas Isaac agreed with this view. Jaitley said the committee will look into five issues flagged by the Council, including whether the new tax should be levied only in the state concerned or should it be an all-India levy, and that should it be on specified luxury or sin goods only.

The GoM will also look into whether National Disaster Response Fund (NDRF)/State Disaster Response Fund (SRF) mechanism is sufficient to deal with calamities and also define circumstances where the ‘calamity tax’ can be imposed as also the legal aspect of imposition of such a tax within the GST.

One of the major concerns highlighted in the meeting for such a special cess was the need to tweak the returns software by GSTN, even if for a limited period of time, which could create issues when the system is broadly settled now, a senior government official said. Also, a state-specific state would definitely the principle of one nation, one tax and trade could shift to neighbouring states in case the cess is restricted to only one state such as Kerala, Jaitley said.

Kerala Finance Minster Thomas Isaac after the Council meeting said the GST law provides that the Council can impose a tax for a temporary period in the GST framework to help states in terms of exigencies but most states agreed that it needs to be considered at national level. “Constitution does provide for provision to introduce the tax for a temporary period in the GST framework to help states in times of exigencies like this. But we have not got details regarding that, therefore a Group of Ministers will be constituted who will look into the various issues involved. The Council’s discussion was let it not be on the suffering state alone, so either cess or an additional 1 per cent tax on some commodities, all these are possibilities. But we have not got details regarding that, therefore GoM will look into the various issues,” Isaac said.

Assam Finance Minister Himanta Biswa Sarma, Kerala Finance Minister Thomas Isaac and Punjab Finance Minister Manpreet Singh Badal are part of the ministerial committee. Other members of the GoM are Odisha Finance & Excise Minister Sashi Bhusan Behera, Maharashtra Finance & Excise Minister Sudhir Murgantiwar and Uttarakhand Finance Minister Prakash Pant.

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