The chief ministers of Kerala, Punjab, Chhattisgarh, West Bengal, Delhi and Telangana will write to PM Narendra Modi asking the centre to borrow funds on its own for the compensation payment in full.
THIRUVANANTHAPURAM: A meeting of six non-BJP ruled states including Kerala on Monday decided to reject both the options put forward by the central government for GST compensation payment.
It decided to expand the debate outside the realm of the GST council and project it as a challenge to federalism.
Other states which participated in the meeting include Punjab, Chhattisgarh, West Bengal, Delhi and Telangana and the chief ministers of these states will write to Prime Minister Narendra Modi asking the centre to borrow funds on its own for the compensation payment in full.
The classification of the losses as that due to GST transition and pandemic-related incidents is unacceptable and hence the GST Council can extend the compensation cess period until the money is recouped, the meeting observed.
Kerala’s Finance Minister Thomas Isaac said an elaborate meeting with the participation of around ten states will be convened in a few days to devise future plans.
It is learnt that the Congress high command has asked its chief ministers to join the next meeting to put up a joint fight against the centre on the issue.
“The decision to reject the two options was unanimous. We will never accept any attempt to draw a distinction between loss due to Covid-19 and normal losses. The proposal to make a uniform increase in the borrowing limit is absurd since the losses would differ among states. The centre’s stand is a challenge to the principles of federalism,” he told.
The meeting observed that the GST compensation is to be paid as per the assurance in the Constitution.
The section seven of the Goods and Services Tax (Compensation to States) Act, 2017 states the manner in which the compensation is to be calculated. “The Union Finance Minister’s act of god theory does not find a place in it. Fourteen per cent in GST revenue is promised to states. They have to be compensated in case of a shortfall,” Isaac said.
“Monday’s meeting decided to communicate the decision to the GST Council in the feedback on the proposed options. The participants also agreed to counter the centre’s arguments on the issue. For this, state finance ministers will give interviews, publish articles and statements,” Isaac added.
The minister said he expects the participation of Jharkhand, Maharashtra, Puducherry and Andhra Pradesh in the next meeting.