Accounting for India's Forest Wealth - Madras School of Economics

Any amount collected through these taxes on the SIN goodsshould not be subsumed either in the CGST or the SGST. Similarly anyamount which is collected as tax/fee/charge/cess which is essentially inthe nature of a user charge for supply of goods and services (includingenvironmental goods and services) also should not be subsumed underthe CGST or SGST. Further, both Centre and the States should take stepsto consolidate all taxes (other than proposed GST) on the sin goods as asingle levy termed as Central Excises and State Excises, respectively. Allentry and Octroi duties levied by the third-tier of Government must beabolished.Thus, the Task Force on GST set up by the 13 thFinanceCommission recognized the issue of negative externalities in a clearerway and collectively refers to these as sin goods and services and makesa distinction between sin goods and non-sin goods. The Task Forcedefines sin goods as goods whose consumption create negativeexternalities and for the purposes of their Report it, collectively orseverally, refers to emission fuels, tobacco goods and alcohol. It observesthat emission fuels generate negative externalities, whose consumptionneeds to be checked. It notes that generally, goods with negativeexternalities should be subjected to excise duties in respect of whichinput tax credit is not allowed.The Thirteenth Finance Commission has suggested that thetaxation of petroleum products and natural gas would be rationalised byincluding them in the tax base. HSD, MS, and ATF could be charged GSTand an additional levy by both the Central and State Governments. Noinput credit would be available against either CGST or SGST on theadditional levy. A similar treatment would be provided to alcohol andtobacco. Such an arrangement would ensure protection of existingrevenues while taking care of environmental concerns.28