Are states now defying the Centre’s authority on GST matters? A recent circular issued by Department of GST in Maharashtra clearly indicates that the state will have a last say on applicability of a circular issued by the Central Board of Indirect Taxes and Customs (CBIC).
A circular issued on 12 January 2021 by the Office of the Commissioner of State Tax, Maharashtra, says that whenever CBIC issues any circular, the Maharashtra GST Department, on its examination, would issue a separate circular regarding its applicability for the implementation of the MGST Act.
The circular withdraws an earlier circular – Circular 39T of 2019 — by the state GST department which had stated that “if GST circular was issued by the CBIC and separate circular regarding the same subject matter was not issued by the state GST department then, GST circular issued by CBIC was applicable, mutatis mutandis, for the implementation of MGST Act, 2017.”
But now the state GST department has changed its stance. It now says it has withdrawn Circular 39T of 2019 in order to maintain the integrity of communication and to avoid confusion. The confusion pertains to cases where circulars are issued by CBIC as well as MGSTD.
“Henceforth, whenever CBIC issues any circular, MGSTD, on its examination, would issue a separate circular regarding its applicability for the implementation of the MGST Act,” says the new circular. This is already causing a lot of mess and confusion among taxpayers. Pritam Mahure, a Pune-based chartered accountant, asks if it was a pre-cursor to diversion between the Centre and States.
He raises more questions. “What happens to unanimity and GST Council then? What if half of the points are accepted by Maharashtra GST department and the rest are not, then what should GST payers do? Whom should they approach?,” asks Mahure. Vivek Jalan, a Kolkata-based chartered accountant, told Business Today that going by the Maharashtra government’s circular, it seems the states are going against CBIC. “It does not look like one nation, one tax,” says Jalan.
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