GST fund: Mamata, other CMs take KCR’s path

On Wednesday, West Bengal Chief Minister Mamata Banerjee wrote to Modi stating that depriving States of GST compensation was an “attempt to undermine federalism”

By   |  Published: 2nd Sep 2020  9:21 pm

New Delhi/Hyderabad: A day after Chief Minister K Chandrashekar Rao’s hard-hitting letter to Prime Minister Narendra Modi over release of full GST compensation and other dues to States, Chief Ministers of West Bengal, Kerala, Tamil Nadu and other States followed suit, echoing similar sentiments.

On Wednesday, West Bengal Chief Minister Mamata Banerjee wrote to Modi stating that depriving States of GST compensation was an “attempt to undermine federalism” and urged him not to belie the trust between States and the Centre on the issue. This was the core issue, among others factors, that Chandrashekhar Rao had highlighted in his missive to the Prime Minister on Tuesday.

Attorney General K K Venugopal’s opinion that it is not the responsibility of the Centre to compensate the States for GST shortfall during a pandemic “appears to be an act of subterfuge”, Banerjee said in the letter.

“On behalf of Bengal and other States, I sincerely urge you not to belie the trust between the States and the Centre on matters of GST which has been hailed globally as the finest example of cooperative federalism,” Banerjee said.

“This is a travesty and an abrogation of the fundamental basis on which the States gave up 70 per cent of their taxing powers, including the entire VAT regime, to usher in the GST regime,” Banerjee said in the four-page letter.

She reminded Modi that as the Chief Minister of Gujarat, he had opposed implementation of GST and the late BJP leader Arun Jaitley had stated that the saffron party did not trust the Centre in honouring compensation of GST losses to the States.

Kerala Chief Minister Pinarayi Vijayan also wrote to Modi to convey his government’s concern over the ‘hurdles’ in payment of GST compensation to the States.

Vijayan sought the Prime Minister’s intervention and requested him to advise the Finance Ministry not to go ahead with the plans to transfer the burden of GST compensation on the States and instead, follow the letter and spirit of the Goods and Services Tax (Compensation to States) Act, 2017.

He said the revenue loss and expenditure pressures have been much greater for the States.
On Tuesday, Delhi Chief Minister Arvind Kejriwal also wrote to the Prime Minister calling the option given to States by the Finance Ministry to borrow money an “onerous burden”, and asked him to consider other legally viable and sustainable options for providing GST dues.

Chhattisgarh Chief Minister Bhupesh Baghel wrote “ You are well aware that as per constitutional provisions the centre is accountable for providing GST compensation.” The Tamil Nadu Chief Minister Edappadi K Palaniswami also echoed similar views.

“Our stance has been that the Government of India (GoI) has moral and legal obligation to pay compensation for shortfall in GST collections,” he said in a letter to Modi. He further stated, “we had also indicated that it was for the GoI to find the necessary funds to compensate the States, including from the Consolidated Fund of India if there was a shortfall in the cess collections.”