Chhattisgarh has suggested a change in the GST revenue distribution formula if the compensation to the states is not extended beyond June 30. However, its primary demand is to extend the period of compensation. Meanwhile, West Bengal has said that the Supreme Court’s observations in the Mohit Mineral case should be the guiding principle for decision-making in the GST Council.
Kerala and other opposition-ruled states have also demanded extension of compensation.
In a letter to Finance Minister Nirmala Sitharaman, Chhattisgarh’s Commercial Taxes Minister and GST Council member TS Singh Deo said the provision of 14 per cent protected revenue should continue for at least the next five years, especially in the mining and manufacturing sectors. The states which are not consumers in the state suffer huge loss of revenue.
As he could not attend the two-day meeting being held here due to Covid, he said that he is writing not only on behalf of Chhattisgarh but also on behalf of other mining and manufacturing states. “The most pertinent issue being brought to his attention is the abolition of the provision of 14 per cent protected revenue on June 30. Requested an extension of 5 years on this to save the states from severe revenue loss and let them function as effective federal. units of India,” he said in a series of tweets, adding that his state suffered a loss of ₹2,786 crore, ₹3,176 crore, ₹3,620 crore, and ₹4,127 crore during the financial years 2018-19, 2019-20, 2020-21 Is. , and 2021-22 respectively.
He said that if the states were to function as an effective federal unit of India, it would be impossible to invest in capital development, employment and investment in the social sector with such loss of revenue which is not compensated. Keeping these in mind, he pressurized to extend the period of compensation beyond June 30.
“If the protected revenue provision is not continued, the 50 per cent formula for CGST and SHST should be changed to 80-70 per cent SGST and 20-30 per cent for CGST,” he suggested.
Supreme Court’s decision
Reminding about the famous judgment of the Supreme Court in the Mohit Mineral case, where it was observed that the GST Council is only recommendatory in nature and the recommendations are not binding on the states, Singh Deo said: “While we do this in the GST Council. As members do not unilaterally ensure financial stability through revenue collection for each state and union territory in India, the concept for which the GST Council was set up may seem untenable.
Meanwhile, in a separate letter, Amit Mitra, Principal Chief Adviser to the Chief Minister and Finance Department of West Bengal, also reminded about the apex court’s observation. “Following the decision of the Supreme Court, it has become imperative for the GST Council to take every decision unanimously and leave out any tinge of majoritarianism, not only for the future credibility of the GST Council but also to maintain its rich tradition. To keep too. August body,” he said.
In addition, he urged Finance Minister Sitharaman to take note of an important observation by the Court and “seriously discuss the far-reaching implications of the observation in today’s meeting of the Council, so that all future decisions of the Council in letter and spirit.” to be guided.”
Published on
June 28, 2022