TN renews demand for release of dues in GST council meet

CHENNAI: Renewing its demand for the immediate release of GST and IGST dues in one installment as recommended by the Group of Ministers, the State government on Monday agreed to option 1 proposed by the Centre for settlement of GST dues.

Participating in the 42nd meeting of the GST Council through video conference from the secretariat, Fisheries Minister D Jayakumar recalled that the State had already pointed out that the assumption of 10 per cent normal growth in option 1 would be highly unrealistic and unwarranted.  

“The revenue gap of States must be assessed based on an appropriate proportion of the total anticipated loss this financial year under option 1. Given the very limited options available, Tamil Nadu chooses option 1 in the hope it will be reworked to reflect a higher proportion of the actual loss in revenue of States, the minister added. Jayakumar said the group of ministers constituted for the purpose of examining the issue of IGST settlement for the year 2017-18 had acknowledged that `4,321 crore was due to Tamil Nadu. He also pointed out that in 2020-21, till July 2020, compensation of `12,258.94 crore was due.  

“It is a matter of grave urgency that the GST compensation payments are made immediately to enable us to continue to battle Covid-19.  Our stance has consistently been that the Centre has a moral and legal obligation to pay the compensation for the shortfall in GST collections,” he underscored.

Stating that it was for the Government of India to find the necessary funds to compensate States if there was a shortfall in the cess collections, Jayakumar recalled that he had, in the 41st GST meeting suggested that the Centre could mobilise resources and lend the funds required to the GST Compensation Fund. The loan could then be serviced through an extension of the GST Cess for a few years beyond 2021-22.”

The minister said though it was a very reasonable and practical suggestion and was agreed to by almost all States, the Centre did not accept it. Referring to the two options given to the States on August 27 which entailed borrowings from open market, he said “In an effort to limit the amount of borrowing in 2020-21, under option 1, an artificial distinction is being drawn between GST implementation-based and Covid-induced losses.”

“The GST compensation is payable for the entire shortfall in revenue collection, even if it is not on account of GST implementation. It has also been stated that the balance shortfall will be made good in subsequent years,” he pointed out. 

The minister said even for the current financial year, partial release of compensation might be a compulsion. “But this ought not to be justified based on presumptive loss solely on account of introduction of GST. It is a fait accompli that given the fiscal situation, States have to remain content with receiving only a portion of the compensation,” he added.