Chief Minister again talks of legal battle over GST on projects

KCR asks officials to estimate how much burden it would be on ongoing project works if GST was levied before he writes letter to Prime Minister.

Published: 07th August 2017 03:31 AM  |   Last Updated: 07th August 2017 08:09 AM   |  A+A-

By Express News Service

HYDERABAD: While postponing his decision to write a letter to prime minister Narendra Modi, Chief Minister K Chandrasekhar Rao on Sunday reiterated that his government would wage a legal battle, if needed, against the Centre till it exempted all ongoing projects such as irrigation projects, drinking water projects and welfare schemes from GST.

He made it clear that the state government was ready to put up an uncompromising fight against the Union government to exert pressure on it to rollback its decision to levy GST even on projects which had been launched prior to introduction of the tax.

The CM held a meeting with officials concerned at Pragathi Bhavan here on Sunday. According to a press release from CMO, Rao wondered how the projects being constructed/implemented for the welfare of the people could be brought under the GST purview. “That too, all these projects were launched prior to July 1. Hence levying GST on these projects is not proper.

Not only TS but all other states will incur huge losses because of this move,” the CM added. Officials said the state would have to  bear an additional burden of Rs 19,000 crore  because of the Centre’s move. Then, KCR is learnt to have told the officials that it would be very difficult to implement a decision taken after the presentation of the state’s annual budget as the project details had to be included in the budget again.

“We have already prepared the budget by considering 5 pc VAT on each project. Now, with the Centre deciding to impose 12 pc GST on these projects, the cost estimates for all the projects will increase. How can we make changes in the budget at this juncture in accordance with the GST structure? How far is it justified to levy GST on the works started on June 30 whereas the GST came into existence on July 1?” he wondered.

Letter to PM

Rao, who had already decided to write to Modi urging him to reduce 12 pc GST on the ongoing projects, discussed the points to be incorporated in the letter. The meeting discussed the impact of 12 pc GST on the departments. Officers from the departments concerned placed their estimates before Rao.
Though it was decided to write a letter to the PM on Sunday, it was postponed due to non-availability of the expenditure statistics with regard to irrigation, Mission Bhagiratha, housing, power projects, roads and other schemes.

He, therefore, asked the officials to estimate how much burden it would be on works if GST was levied. The officers concerned will meet on Monday and give a final touch to the statistics. After this, the CM will write a letter to the PM with all the details. Chief secretary SP Singh, TS Genco chairman D Prabhakar Rao, special chief secretary (irrigation) SK Joshi, government advisor GR Reddy, senior IAS officer Somesh Kumar and others participated in the meeting.

CM’s argument

TS told GST Council on Saturday that tax should not be levied on public utility projects. Then the Council reduced GST from 18 to 12 pc. CM says we are not satisfied with the decision. It is not fair to levy GST, which was introduced on July 1, on projects taken up earlier. If 12 pc GST is levied, not only Telangana but also all other states will incur losses. The Centre should rethink. Or else, we will have no option but to wage a legal battle

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