THIRUVANANTHAPURAM: Kerala will move the Supreme Court if the Central government goes back on its commitment to pay the GST compensation to states, Finance Minister TM Thomas Isaac has said.
He was reacting to reports that the Centre has told a parliamentary panel that it will be forced to stop the payment of compensation in the near future due to the COVID-19 slowdown. The minister wondered how the Union government can defy the GST Compensation Act that guarantees a 14 per cent annual growth rate in tax collection for states until FY2022.
"The proposal is a breach of an agreement and against the federal spirit. This is sheer arrogance. I'm sure that the proposal will be opposed by all states in the GST council, including BJP governments," he told TNIE.
Isaac said Kerala will take the lead and move the Supreme Court if the Central government goes ahead with the proposal. "It has to be fought tooth and nail. Let's see whether it will formally come out. I don't think the Central government will get sufficient majority to pass it in the GST council," he said.
Recently, the Centre had paid up the pending compensation to states for 2019-2020. Of the total Rs 13,806 crore sanctioned for March, Kerala received Rs 800 crore. Including this, the state received a total of Rs 8,111 crore as compensation in the FY2019-2020.
Isaac said the strange proposal comes at a time when the state is eagerly waiting for the compensation pending in the current fiscal. A total of Rs 6,000 crore is due to the state as compensation for the months of April, May and June, he said.
Foreseeing a fall in the GST collections, Kerala had earlier proposed to extend the GST compensation cess period to mobilise funds for compensation payment. Isaac's proposal at the council was to extend the cess from five to six years or until the money is recouped. The minister had also suggested opting for market borrowing.