Congress chief Sonia Gandhi on Wednesday attacked the Narendra Modi government for not clearing Goods and Service Tax compensation dues that it owes to states, leading to financial crisis amid the coronavirus pandemic. Gandhi was interacting with chief ministers of Congress-ruled states of Punjab, Rajasthan, Chhattisgarh and Puducherry along with those of Jharkhand, Maharashtra and West Bengal to discuss GST compensation as well as holding of NEET-JEE exams.
“GST compensation seems to be a big issue,” the Congress president told the chief ministers. “Compensation being paid to states on time, according to laws passed by Parliament is crucial and it is not happening. Dues have accumulated and state finances are badly affected.”
The GST Council will meet on August 27 to discuss if the Centre should clear past dues to the states and compensate them for the loss of revenue due to the coronavirus crisis. State governments were guaranteed compensation from the Centre for the first five years of the implementation of the GST since it came into force on July 1, 2017. This compensation was in lieu of the GST taking away the powers of the states to levy indirect taxes to raise revenues.
“In the meeting of the standing committee of finance on August 11, the finance secretary clearly said the central government is not in a position to pay their mandatory compensation of 14% for the current year,” Gandhi said at the virtual meeting. “This refusal to compensate the states is nothing short of betrayal on the part of the Modi government, betrayal of state governments and the people of India. The Central government continues to profiteer from unilateral cesses which are not shareable with states. Also, ordinances have been issued without consulting the states on agricultural marketing.”
The Congress president said GST was enacted as an example of cooperative federalism. “It came into existence as states agreed to forego their constitutional powers of taxation in larger national interest and on solemn promise of compulsory GST compensation for 5 years,” she added.
Chhattisgarh Chief Minister Bhupesh Baghel said the Centre has not paid compensation to the states for the last four months. “Today, the situation is fearful,” he added.
Meanwhile, Punjab Chief Minister Captain Amarinder Singh said his state may face a revenue deficit of Rs 25,000 crore this year. “Covid-19 situation is getting worse,” he said at the meeting. “We are in a situation where the finances of our states are completely down. The Centre has not paid GST compensation. I agree with Mamata [Banerjee] ji that we should collectively meet the prime minister.”
Attorney General KK Venugopal has said that the government has to compensate states fully for the loss of revenue in GST during the pandemic, NDTV reported. The finance ministry sought Venugopal’s advice amid stringent criticism.
On Tuesday, Congress leaders Rajeev Gowda, Manpreet Badal and Krishna Byre Gowda had demanded that states be paid the compensation of 14% as mandated by the GST Compensation Act for the expected Rs 6 lakh crore loss.