Transfer GST dues to States immediately: CPI(M)

E-commerce companies sell goods much below their market value, thereby denying the government the legitimate GST revenue.

The GST compensation dues for the first quarter of 2020-21, which has just ended, should be immediately transferred to the State governments, the CPI(M) said here on Wednesday, adding that reneging on its commitment to the States tantamount to a violation of the federal principles of the Constitution.

The Hindu had reported on Tuesday that the Finance Secretary had informed the Parliamentary Standing Committee that the government was not in a position to pay the GST share to the States as per the current revenue sharing formula for the financial year 2020-21. Four months after the previous financial year, the Centre finally paid the GST compensation dues to the States upto March 31 on Monday.

The party pointed out that State governments were guaranteed compensation from the Centre for the first five years of the implementation of the GST. This compensation was in lieu of the GST taking away the powers of the States to levy indirect taxes to raise revenues.

“For the Central government to now renege from these commitments is tantamount to further centralisation of authority, violating the federal principles of our Constitution and depriving the States of their legitimate revenues. This is not acceptable. These funds are all the more needed now when the single-minded focus should be on combating the pandemic,” the CPI(M) Polit Bureau said in a statement here.

The party has reiterated its demand that the entire fund collected in the name of combating the COVID-19 pandemic, in a “non-transparent”, “non-auditable private trust fund”, bearing the name of the Prime Minister, should be transferred to the State governments who are in the forefront of the efforts to combat the virus.

‘State of economy’

Meanwhile, Congress MP Manish Tewari, a member of Standing Committee on Finance, has written a letter to the Committee’s Chairperson, Jayant Sinha, for the second time, demanding that the “state of economy” should be discussed by the Committee.

He asked why Mr. Sinha was “so peculiarly disinclined” to hold a discussion on the subject. “If I am given to understand correctly, one of the remits of this standing committee is to deliberate upon the the policy frameworks of the Ministry of Finance. The state of the Union government’s finances as well as the health of the economy do constitute such policy frameworks,” he wrote.

The Committee, he said, would like to learn from the Ministry of Finance if “the budget numbers presented on February 1, 2020, are still valid post the extended, if not ill-conceived, lockdown or would the country require a de novo budget, irrespective of its form or legislative shape”.

The Committee also needs to know about the revenue shortfall in the first quarter of the current fiscal and what expenditure rationalisation measures the Central government has undertaken in view of the deteriorating economic situation, he said. Mr. Tewari listed out eight questions that needed to be answered, adding further that the Committee would be remiss in its oversight function if it does not address these issues.

Mr. Tewari said in his letter that if Mr. Sinha believes that macroeconomic issues are beyond the remit of the officers of the Finance Ministry, the Finance Minister can be requested to speak to the Committee.

The next meeting of the Standing Committee on Finance is slated for August 11. The Committee is likely to discuss funding to the agriculture sector and the flow of credit promised to the MSME sector in the stimulus package.