PTR slams move to raise GST on coconut oil, calls it anti-southern states
Tamil Nadu Finance Minister Palanivel Thiagarajan slammed the GST Fitment Committee's recommendation of attracting an 18% Goods and Services Tax (GST) on coconut oil when packed and sold in a unit container less than 1 litre, and said that the move was in “bad faith”. Terming the recommendation as anti-poor and anti-southern states, he said the move was against the interest of Tamil Nadu and states such as Kerala, Andhra Pradesh and Karnataka. He stated that TN is one of the largest producers of coconuts and coconut oil. The Minister made these remarks in his prepared statement to the GST Council, as he did not attend the GST Council meeting on Friday, September 17.
The Fitment Committee recommended that coconut oil, when packed and sold in a unit container of less than one litre, may be classified as hair oil attracting a GST rate of 18% irrespective of its actual end-use, and containers above one litre would be taxed at 5%. "We find this recommendation lacking in either logic or fairness. We will go so far as to consider this decision to have been made with bad faith intent against the interest of Tamil Nadu," he said.
He also questioned how something edible can be classified as non-edible for the sake of levying GST. “How do you decide on one whole litre as the cut-off for even considering whether something is intended for edible use or not. It is an arbitrary cut-off point, bereft of human compassion and basic logic," he said.
Holding that not many poor families buy cooking oil in units more than one litre, he said why should coconut oil only be singled out to other edible oils with multiple uses, such as mustard oil or gingelly oil. “How many poor families buy their cooking oil in units greater than one litre? The answer is very few. How many families in the southern states cook with coconut oil? The answer is very many,” he said.
He questioned why only coconut oil should be singled out, as compared to other edible oils.
"Are they not considered because their origin is not largely contained to the southern states like Tamil Nadu," he asked, further questioning why south Indian oil is being discriminated against while oil that is imported is levied a GST rate of 5% irrespective of quantity.
“What about imported oils such as Palm Oil or Olive Oil, which the Union Government in its wisdom has chosen to exempt from Import Duties? Why is a south Indian oil being discriminated against, while oil imported from foreign countries gets the 5% rate in ANY QUANTITY?” he questioned.
He also said that the Tamil Nadu government found the proposal to be anti-poor and anti-south Indian states. Lakhs of coconut farmers of Tamil Nadu and other states would never forget this outcome were this GST Council to perpetrate such gross injustice against them, he added.
According to CNBC-TV18, the proposal has been put on hold for further study.
PTR had also opposed the idea of bringing fuels under the GST by saying the petrol and diesel remain one of the last vestiges of a state's right to manage its own revenue, according to the state Finance Minister. He raised concerns that the Union government has been increasing tax on petrol and diesel between 500% and 1,000% since 2014.
"We are of the general opinion that the State taxation of petrol and diesel remains one of the last vestiges of any state's right to manage their own revenues, since the advent of GST stripped away most of the small range of rights originally written to the Constitution. We are reluctant to give up any of these few remaining rights and so are fundamentally opposed to bringing these products into the ambit of GST," the Minister said. However, he added that the state government would reconsider its decision if the Union government were to completely drop the levy of all cess and surcharge on such products.
After Friday’s meeting, Union Finance Minister Nirmala Sitharaman said that the GST Council had decided that this was not the right time to bring petrol and petroleum products under the ambit of the GST.
With PTI inputs