Opposition-led states gear up to question Centre's GST borrowing options

Opposition-led states are all set to question the Centre’s two borrowing options on the Goods and Services Tax (GST) shortfall compensation, ahead of the Council meeting on October 5.

States like Punjab, Chhattisgarh, Jharkhand, West Bengal, Kerala, Delhi, Maharashtra, Puducherry and Telangana may take a collective decision during the informal meeting, which will be held on October 3. The agenda is to likely reject the borrowing options and ask the Centre to activate the grievance redressal mechanism.

“Our stance is what it was. The Centre should not take a majoritarian view but develop a consensus. This has been the spirit of the GST Council. There are a few states who do not understand why they should take responsibility for a shortfall. First, you took away our taxation rights and then you want us to take a loan to make good the GST compensation?” said Chhattisgarh commercial tax (GST) Minister TS Singhdeo to The Economic Times.

According to the report, Singhdeo also added that there would be more discussions on the matter and the formulation of a strategy.

The implementation of the GST has been criticised by the Opposition, and a recent controversy erupted due to the GST revenue shortfall of Rs 2.35 lakh crore for the states. As per the GST Act, the Centre has to compensate for any GST losses.

However, a discrepancy arises as the Centre’s calculation of Rs 97,000 crore is on account of GST implementation and Rs 1.38 lakh crore is the impact of Covid-19 on state revenues, the report added.

Manpreet Badal, Punjab’s Finance Minister said, “It cannot be my word against theirs. There is a dispute resolution mechanism under the law. Why has the Centre been unwilling to activate it for three and a half years? This sets a wrong precedent for India,” to the news organisation.

Badal said that Punjab would reject the borrowing options, “We do not know the math used by the finance ministry to reach these gures of Rs 97,000 crore and Rs 1.38 lakh crore. For us, this is a constitutional violation,”(sic) he said.

West Bengal and Jharkhand too have rejected the options and the Opposition is looking towards Tamil Nadu and Telangana as well for support.