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Why GST Council broke its tradition of taking decisions unanimously

Dipak Mondal     December 19, 2019

Breaking from its 'tradition', Goods and Services Tax (GST) Council, the governing body that takes all GST related decision, for the first time resorted to voting to arrive at a decision on the uniform tax rate on lottery. After the voting, the GST Council decided that tax on state-run lotteries and state-authorised lotteries would attract a uniform rate of 28 per cent.

Earlier state-owned lotteries used to attract 12 per cent GST, while 28 per cent tax rate was levied on state-authorised lotteries. Interestingly, all decisions taken by the GST Council before this were unanimous. So what transpired during the meeting that forced the Council to go for voting, and hence doing away with the tradition of taking decision by consensus?

When asked, Finance Minister Nirmala Sitharaman told the media that there was extended debate on the uniform rate on the lottery. "Every attempt was made to keep the tradition alive. Every attempt was made to convince the members of the council. But eventually, the council was reminded that the rules allow voting and that tradition is not part of the rule book, and that rules should govern the working of the council."

Also Read: Lady Luck gets dearer! GST hiked to 28% on lotteries

The FM said the decision to vote was imposed on the request of a member. "...Even after that, I had taken the sense of the house, and but I was again reminded that the sense of the house was not warranted and that we should go by the rules. So we went ahead with the decision to vote. So, it is not imposed by the council, it is not imposed by me as a chair but it was on a request from one of the member."

The 'member' she referred to, according to those present in the meeting, was Kerala Finance Minister Thomas Isaac. Apparently, he remained adamant on voting on the uniform tax rate on the lottery.

Also Read: GST Council meet: Tax rates remain unchanged, steps taken to boost compliance

The Kerala and West Bengal governments have been opposing the move of having a uniform GST on state-run and other lotteries. They fear losing revenue if the GST on state-authorised lotteries would be brought on par with state-run lotteries.

To address the revenue concerns of the states, the Council instead of reducing the GST on the state-authorised lottery to 12 per cent hiked it on state-run lotteries to 28 per cent. A decision of the GST Council requires a majority of at least 75 per cent votes. Voting is done by a weighted average system, with the Centre having 1/3rd weightage and states collectively having 2/3rd weightage.

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