Business Desk, ETV Bharat: States like Maharashtra, West Bengal and Punjab came down heavily on the Bharatiya Janata Party (BJP) government at the Centre on Wednesday for holding up the goods and services tax (GST) compensation in times of a crisis like coronavirus.
In a virtual meeting convened by Congress interim chief Sonia Gandhi with chief ministers of major non-BJP-ruled states like Punjab, Rajasthan, West Bengal, Maharashtra, Jharkhand etc, the issue of GST compensation remained central as states attacked the Narendra Modi government of not giving them their due rights.
West Bengal chief minister Mamata Banerjee said: “We are not begging… these are our dues… West Bengal is yet to be paid Rs 53,000 crore from the Centre. No funds are available. It is very difficult to give salaries to workers. It is a very serious situation.”
Punjab chief minister Amarinder Singh agreed, saying that the state’s financial situation was very bad. “As per current estimates, Punjab would end this fiscal year with Rs 25,000 crore deficit. I don’t have money to deal with coronavirus… I am thinking sometimes on how will I pay salaries and other compensations,” he said during the meeting.
“We’ve spent nearly Rs 500 crore on coronavirus already. We’re in a situation where the finances of our states are completely down. Centre has not paid GST compensation. I agree with Mamata ji that we should collectively see PM,” Singh added.
Maharashtra chief minister Uddhav Thackrey also urged other chief ministers to put up a strong fight against the Centre for their rights. “First we have to decide whether we have to fight or be fearful... if we have to fight, then we have to do it at any cost.”
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He added: “States have not received GST compensation dues since April… the amount to be received from the central government is increasing day by day… we have written to the government many times, but sometimes we get a response, sometimes we don’t.”
As per the current law, states are guaranteed full compensation for any revenue loss for the first five years after the introduction of GST in July 2017. However, with GST collection falling significantly in the past few months, Centre has delayed payment of compensation to states. Currently, compensations that are usually paid on a bi-monthly basis are due for the period starting April 2020.
“In the meeting of standing committee of finance on 11 August, finance secretary of the government of India stated that Centre is not in a position to pay mandatory GST compensation of 14% for the current year. This refusal is nothing short of betrayal on part of Modi government,” Sonia Gandhi said during the meeting.
Meanwhile, the GST Council is meeting on Thursday to reportedly take up the single-point agenda of GST compensation to states affected by delays in the release by the Centre.
It would be interesting to see the central government’s position on the issue, especially taking into account the legal advice given by Attorney General K.K. Venugopal in March on the legality of market borrowing by the GST council to make good any shortfall in the compensation fund.
“The Attorney General is of the opinion that the Centre has no statutory obligation to make up from its coffers any shortfall in GST revenues of states and the state governments may now have to look at market borrowings against future revenue mop-up,” a media report had said.
