GoM seeks opinion from Law and Food Ministry

A Group of Ministers (GoM), headed by Assam Finance Minister Himanta Biswa Sarma, has sought opinion from the Law Ministry on the legality of imposing cess on sugar. The GoM has also  sought a report from the food ministry on the final utilisation of the proceeds from levy of sugar cess.

“The GoM met on Monday. First question is whether council at all has the power to impose cess, we have decided to refer that to the Law Ministry,” Sarma said after the first meeting of the panel. The GoM will meet next on June 3 in Mumbai.

The GoM was constituted on May 4 to look into the feasibility of implementing the Food Ministry proposal of levying cess on sugar to benefit sugar cane farmers.

The Food Ministry in its report to the GoM will detail out how it is proposing to disburse the proceeds from levy of cess. The GoM expects the Law Ministry as well as the Food Ministry to give their views by the end of this month.

“We must first know whether legally we have the power or not to levy cess.... If the Law Ministry says there is power, Council will exercise that power when it serves public interest,” Sarma said.

Under the present Goods and Services Tax(GST) laws, a cess is levied on luxury, sin and demerit goods on top of the highest tax rate of 28 per cent. The GST Council had on May 4 deliberated on the food ministry proposal of imposition of cess of up to Rs 3 per kg on supply of sugar over and above 5 per cent GST rate.

As per estimates, the levy of cess could fetch about Rs 6,700 crore to the Government.

The Food Ministry also recommended to the Council to cut GST rate on ethanol from present 18 per cent to 12 per cent.

The Council then set up a 5-member GoM under Sarma to consider the issues surrounding the levy of cess on sugar.

The other members of the GoM include Uttar Pradesh Finance Minister Rajesh Agrawal, Maharashtra Finance Minister Sudhir Mungatiwar, Kerala Finance Minister Thomas Isaac and Tamil Nadu Fisheries Minister D Jayakumar.