GST Council meet: Centre is betraying federalism: Dy CM

New Delhi: Coming out of the GST Council meeting on Thursday, Deputy Chief Minister Manish Sisodia said that the Centre's refusal to pay GST compensation to states was a betrayal of the federalist structure of the country. Sisodia said that the Union government had failed in its responsibility to pay states what they are owed and had also failed to implement the tax reform properly.

The Deputy CM said that when GST was rolled out, states were promised that they would be given compensation for the next five years with 14 percent of growth.

"But today, the Central government has refused to pay by saying as per the law, due to the ongoing situation created by COVID-19, we are not liable to pay anything," he said.

"In the first two years when the Central government earned extra cess of Rs 47,000 crore which was supposed to be given as compensation, they kept it in their fund. Today when the revenue has started decreasing, they started asking AG whether we are liable to give this amount to states or not," he said.

Sisodia said that in the meeting several states — includng BJP-run states — demanded compensation from the Centre. He said that in the previous GST Council meeting it was promised that the Central government will take full responsibility if the revenue of any state decreases which will be compensated.

He added that if GST were not there, then states would have been able to define their taxes. "We would have been able to manage our expenses on our own but after joining the GST regime, states had to surrender the maximum of their rights to GST council," he said.

Sisodia, who is also the Finance Minister of Delhi, said, "It was decided that if required, the Central government will take a loan which will be repaid through the cess. But today, the Central government refused to take a loan for any state. They gave an option to states that if you need compensation, you can take a loan from RBI. We will ask RBI to provide you loans." He further added, "Due to the unique status of Delhi, our government cannot take a loan. They are showing double-standards with the people of Delhi."

He also said that in the last four months, the state has collected Rs 7,000 crore lesser tax. "If we look at the entire year, we have a shortfall of Rs 21,000 crore. The Central government should take a loan on our behalf as we also need to pay salaries to our doctors, teachers, engineers, DTC, and other employees," he said. He added, "This is the biggest betrayal of the Central government in the history of federalism in India."

"Whatever evasion was taking place under the VAT/Sales tax regime is still continuing in the GST regime," he added.