The Centre told the Parliamentary Standing Committee on Finance on Tuesday that it is in no position to clear the Goods and Services Tax dues of states anytime soon, The Hindu reported quoting unidentified officials. Finance Secretary Ajay Bhushan Pandey’s comments were a response to a question on the revenue shortfall due to the coronavirus pandemic.

The members of the committee, which is headed by Bharatiya Janata Party MP Jayant Sinha, asked Pandey how the Centre could renege on its promise to states to pay GST compensation. “He pointed out that the GST Act has provisions to rework the formula for paying compensation to the State governments, if the revenue collection drops below a certain threshold,” an unidentified member of the committee told The Hindu.

The GST Council was scheduled to meet this month to rework compensation to the states, but no meeting has been convened so far. On Tuesday, Pandey and Department for Promotion of Industry and Internal Trade Secretary Guruprasad Mohapatra told the panel that GST collections are likely to fall significantly as consumption has reduced significantly due to the pandemic, The Economic Times reported.

The Ministry of Finance said on Monday the Centre had released the final instalment of Rs 13,806 crore GST compensation to the states, for the year 2019-’20. The total compensation paid to the states for 2019-’20 has been Rs 1.65 lakh crore, against a collection of Rs 95,444 crore, the ministry said.

In the first three months of the current financial year (April to June), the government collected Rs 1.85 lakh crore as GST, compared to Rs 3.14 lakh crore in April-June 2019.

Opposition members protest lack of discussion on economy

Meanwhile, the Opposition members of the parliamentary committee were outraged that instead of topics focusing on the current state of the economy, the topic chosen was “financing the innovation ecosystem and India’s growth companies”. Congress MPs Manish Tewari, Ambika Soni, Gaurav Gogoi and Nationalist Congress Party legislator Praful Patel demanded that the finance secretary discuss more current matters.

But Sinha said most of the questions posed by the Opposition committee members were political in nature and could not be answered by the Ministry of Finance. They can be taken up during Parliament sessions and answered by Minister of Finance Nirmala Sitharaman, he reportedly said. In response, Patel retorted that if the panel could not discuss even the basic state of the economy, it should be disbanded.