NEW DELHI: The Comptroller and Auditor General of India (CAG) has pointed out that the Centre not only diverted Rs 47,000 crore from GST compensation cess for other purposes, but also rejected a transfer to states worth Rs 25,000 crore, set aside for urban local bodies and special grants. According to the CAG’s report, tabled in Parliament on Wednesday, the Centre has shown savings to the tune of Rs 25,000 crore under the head transfer to States in its accounts.
However, these savings arose because request for grants from certain states were denied on flimsy grounds. “Savings of Rs 15,669.92 crore were due to less payment of ‘Grants for Local Bodies’ and were attributed by the department to non-fulfillment of prescribed terms and conditions for release of the grants by some State Governments. Besides, savings of Rs 10,314.19 crore were due to less disbursal under ‘Special Assistance-States’ and were ascribed to non-receipt of viable proposals from State Governments,” the CAG report noted.
However, the audit revealed that this was done without any checks or balances. “The explanations given are not acceptable and show that shortfalls on the part of States in submission of proposals were not monitored and followed up by the Departments concerned,” the CAG said. The report comes at a time when relations between the Centre and the states are already strained.
The report has already stirred a fresh controversy since it pointed out violations of the GST Compensation Cess Act, 2017 by the Centre as it short credited GST Compensation Cess collections totalling to Rs 47,272 crore during 2017-18 and 2018-19, and then diverted it to other purposes, which the CAG said was a violation.
While the Finance ministry accepted the audit and said that transfers to the Public Account would be made in the subsequent year, this will require fresh parliamentary approvals. The development also punctures the Centre’s claim that the Consolidated Fund of India cannot be used for paying GST compensation to States, an argument the finance minister had made at the most recent GST meeting.