Kolkata: West Bengal Chief Minister Mamata Banerjee wrote Wednesday to Prime Minister Narendra Modi that depriving states of GST compensation is an ‘attempt to undermine federalism’. Mamata Banerjee urged the PM not to belie the trust between the states and the Centre on the issue.
Attorney General KK Venugopal’s opinion that it is not the responsibility of the Centre to compensate the states for Goods and Services Tax (GST) shortfall during a pandemic ‘appears to be an act of subterfuge’, Banerjee said in the letter.
In the 41st meeting of GST Council, August 27, Union Finance Minister Nirmala Sitharaman said that the COVID-19 pandemic is an ‘act of God’ which has hit GST collection. Sitharaman had ruled out paying compensation to states from its coffers.
“On behalf of Bengal and other states, I sincerely urge you not to belie the trust between the States and the Centre on matters of GST. This issue has been hailed globally as the finest example of cooperative federalism,” Banerjee said.
Banerjee asked Modi not to allow ‘an insufferable blow to the federalist polity of the nation’ by depriving the states of the GST compensation.
“I am deeply anguished by the Goods and Services Tax (GST) imbroglio which tantamount to a betrayal of the trust and moral responsibility of the Government of India towards the states, violating the very premise of federalism. This is a travesty and an abrogation of the fundamental basis on which the states gave up 70 per cent of their taxing powers, including the entire VAT regime, to usher in the GST regime,” Banerjee said in the four-page letter.
The ‘agreed formula’ for giving up taxing powers was the promise of full compensation of shortfall in GST collection for five years, she said. Banerjee added that the Centre is duty-bound to give compensation to the states.
Banerjee reminded Modi that as the chief minister of Gujarat, he had opposed implementation of GST. She also pointed out that the late BJP leader Arun Jaitley had stated that the saffron party did not trust the Centre in honouring compensation of GST losses to the states.
“His words are ringing in our ears as we are losing trust on the BJP Government in the Centre, in honouring its solemn, promise of fully compensating GST losses to the states,” Banerjee wrote in the letter.
