Ahead of the August 27 meeting of the Goods and Service Tax Council, the Congress has demanded that the Centre clear all pending dues to the states soon, PTI reported on Wednesday. Compensation payments to states are pending for four months – April, May, June and July.
Congress leaders Rajeev Gowda, Manpreet Badal and Krishna Byre Gowda demanded that states be paid the compensation of 14% as mandated by the GST Compensation Act. “Anything less is a betrayal of the faith of India’s states,” they said in a joint statement during a virtual press conference. They also demanded that states be compensated for the estimated Rs 6 lakh crore loss in revenues due to the coronavirus pandemic.
The central government recently sought the opinion of its top legal counsel to claim it has no obligation to pay full GST compensation to the states. The government is expected to table the attorney general’s views for discussion during Thursday’s meeting.
Punjab Finance Minister Manpreet Badal said India was not a “Banana Republic” to say that it was not mandatory to pay the compensation. “I think, there is a breach of Constitution as far as not being able to pay compensation [is concerned],” said Badal. “The BJP government has no respect for the Constitution, the institutions and the people of India”. He added that the Centre owed Rs 44,000 crore in pending GST dues to Punjab.
“We take a strong exception that India’s revenue secretary goes to Attorney General to get a view that there is no obligation on the part of the government of India to pay compensation, which is part of the Constitution,” said Badal. “If you are not willing to, I feel this amounts to a sovereign default, it is worse than that because the Constitution is being undermined.”
Badal said he has asked Union Finance Minister Nirmala Sitharaman to activate a dispute resolution mechanism for GST-related matters. “It can’t be your word against my word,” he said. “There must be, in case as a dispute or a conflict, a dispute resolution mechanism. The constitution of the GST Council provides for that.”
Gowda also accused the Centre of betraying the states even as they fight against Covid-19. “It is shocking to know that instead of taking steps to help states, it is preparing grounds for betrayal,” he added. “It is replacing cooperative federalism with coercive federalism.” He further alleged that “starving states of funds” has been the official policy of ruling dispensation.
Former Karnataka Finance Minister Krishna Byre Gowda said the lack of help from the Centre’s end was affecting the governance at the state level. He added that the Centre owed Rs 13,000 crore to Karnataka.
Several states, most of them ruled by Opposition parties, have voiced their concerns over GST dues for several months now. On Tuesday, West Bengal Chief Minister Mamata Banerjee said the state was yet to get Rs 53,000 crore from the Centre and Rs 4,500 crore for GST.
Bihar Deputy Chief Minister and Finance Minister Sushil Kumar Modi on Tuesday said the Centre should borrow and pay GST compensation to states. “But the Centre is morally bound to do so”, he said at the Idea Exchange event of The Indian Express. “State finances are under stress. We are able to pay only salaries, wages and pensions. We are heavily dependent on the Centre as 76% of our revenue comes from the Centre.” The BJP is one of the ruling parties in Bihar.
Modi said they will raise the matter during Thursday’s meeting. “States cannot borrow,” he added. “It is the Centre that should borrow. It is the moral responsibility of the Centre to help the states. If states cannot get support from the Centre in these times of difficulty, it would be difficult for the states.”