Group of Ministers on sugar to meet today for the first time, look to clear farmers' dues

A Group of Ministers (GoM) headed by Assam Finance Minister Himanta Biswa Sarma that was formed earlier this month is likely to meet today for the first time.

The group will explore an "alternate" option to raise revenue so as to clear cane dues owed to farmers, a source in know of the matter told Moneycontrol.

Sugarcane farmers are in deep distress with cost of sugar production rising beyond Rs 35 per kg, which is higher than the market price hovering between Rs 26 per kg and Rs 28 per kg.

The food ministry had sought imposition of Cess at a rate not exceeding Rs 3 per kg on supply of sugar, over and above the Goods and Services Tax (GST) rate of 5 percent.

In the 27^th GST Council meeting on May 4, some states including West Bengal, Andhra Pradesh and Kerala had opposed the idea of imposition of Cess on sugar as it is against the structure of GST which aims to simplify tax structure in the country by doing away with multiple taxes.

Finance Minister Arun Jaitley had said that the three view points —imposition of Cess, temporarily increasing tax and exploring an alternate solution — were extensively discussed and debated in the Council meeting.

“This is first (such) suggestion has come up. How are such contingencies to be addressed in the GST regime? Are they to be addressed by imposition of cess or are they to be addressed by temporarily increasing the tax or by some alternative method of revenue raising. These viewpoints were extensively discussed and debated in the Council,” Jaitley said

West Bengal Finance Minister Amit Mitra had said that such a Cess will set a precedent for other states asking for similar levies on other commodities when they are in crisis.

As a result, the whole idea of GST will be lost, Mitra had said.

The Council decided to form a five-member ministerial panel that would make recommendations regarding Cess on sugar in two weeks from May 4.