A group of ministers, tasked by the Goods and Services Tax Council, have rejected the idea of imposing cess on Sugar to help clear dues to sugarcane farmers, on the back of declining Sugarcane arrears.
The group of minister (GoM) on sugar cess, however, endorsed reduction in tax rate on ethanol to 12% from 18%.
It could also look at the option of 1% agri cess on luxury goods that could be levied to deal with unforeseen circumstances in the farm sector.
GST Council had earlier sought the Attorney General's opinion on its legality, keeping in mind the architecture of GST regime that subsumes all cess, surcharge, taxes and other levies. The AG has not yet given his opinion as a case with regard to cess under GST is pending in the Supreme Court. In case the AG gives his views to the GoM soon, it could meet for one more time before the GST Council meeting on July 21, an official said.
Briefing reporters after the GoM meeting, the official said after fixing minimum support price (MSP) for sugar at Rs 29 a kg, the arrears due to cane farmers have come down by Rs 5,000 crore to Rs 18,000 crore. “Considering this positive development, we do not think there is a case for levying cess on sugar at the moment,” he said.
GST Council had in its last meeting in May constituted the GoM to look into the food ministry's proposal of imposing cess of up to Rs 3 per kg on supply of sugar over and above 5% GST rate. The proceeds from the levy, which was estimated at Rs 6,700 crore, would flow into a separate fund and be utilised for interventions in the sugar sector and for cane farmers.