FMs of Congress-ruled States not happy with outcome of GST Council meet

August 27, 2020 09:49 pm | Updated 10:11 pm IST - NEW DELHI:

Punjab Finance Minister Manpreet Singh Badal

Punjab Finance Minister Manpreet Singh Badal

Expressing dissatisfaction over the outcome of the Goods and Services Tax (GST) Council meeting, the Congress on Thursday accused the Centre of thrusting “solutions on States by adopting a majoritarian approach”.

Also read: GST Council meeting: Centre gives States two options for borrowing to meet revenue shortfall

Punjab’s Finance Minister Manpreet Badal at a virtual press conference said the Congress-ruled States are not happy with the outcome of GST Council meeting as decisions were thrust upon them by the Union government.

“We are not happy at the outcome. But we have no choice,” Mr. Badal said at a virtual press conference after the GST Council meeting.

Puducherry Chief Minister V. Narayanasamy and Chhattisgarh Finance Minister T. S. Singh Deo were also a part of the joint press conference.

Also read: Centre morally bound to compensate States for GST shortfall: Sushil Modi

Mr. Narayanasamy, who also holds the finance portfolio, said it was unfortunate the Centre was not honouring its commitment to pay them GST compensation at 14% and helping the States starving for revenues.

The Puduchhery Chief Minister said there is a serious flaw in the GST Act as producer States are losing and consumer States are gaining under the present GST regime and asked the Centre to re-look this aspect.

Mr. Singh Deo said the GST Council is increasingly adopting a majoritarianism approach instead of consensus, which was the practice earlier.

Also read: Centre unable to pay GST dues to States: Union Finance Secretary

In response to Union Finance Minister Nirmala Sitharaman’s proposal that State governments should borrow to bridge the deficit created on account of non-payment of GST compensation, Congress Ministers at the meeting said that it should not be “forced” on them as they would have to discuss the proposal with their respective Cabinets and legislatures.

Mr. Badal, who opened the discussions from the Congress side, asked the Centre to activate the disputes resolution mechanism in the Council as provided for in Article 279 of the Constitution.

Also read: Comment | Making up for shortfalls in GST collection

“I appeal to the Centre that if some States are not agreeable to their proposals, they should not force the solutions on States. The Centre should activate the dispute resolution mechanism in the GST Council, so that States have legal recourse to what they do not agree upon,” Mr. Badal told reporters.

“We saw a trust deficit. The meeting did not progress in a very cordial atmosphere. The Attorney General’s (AG) comments were read out to communicate that the Centre had no legal commitment in the matter. We wonder why the AG’s views were not circulated to us,” he added.

Kerala objects

Kerala has reiterated that the Centre should take a loan and provide GST compensation to the States.

Instead of increasing the cess or extending the cess collection for a further period, Kerala is of the view that taking loans is the best option. But, the Centre should take loans instead of asking States to take loan to provide the compensation.

Addressing a press conference after the 41st GST Council meeting chaired by Finance Minister Nirmala Sitharaman on Thursday, the Finance Minister, T. M. Thomas Issac said the proposals put forward will lead to financial loss for the State. The Centre is of the view that the State should be able to absorb the loss of income, Dr. Issac said.

The State will give its reply within seven days to the proposals put forward by the Centre after holding consultations with the Chief Minister Pinarayi Vijayan and other Ministers.

Segregating the compensation as loss due to COVID-19 and loss due to GST is to avoid paying compensation, Dr. Issac said.

The Centre was delaying the compensation for the last six months, he pointed out. The State can be paid ₹2.5 lakh crore compensation as the Centre has provided ₹21 lakh crore for Atmanirbhar Bharat, the Finance Minister said.

(Inputs from Special Correspondent, Thiruvananthapuram.)

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