HYDERABAD: Finding fault with the procedure being followed by the Central government in sharing the revenue under Integrated Goods and Service Tax (IGST) with the States, the Telangana government has asked the Centre to release the balance amount due to it at the earliest. “The procedure followed by the Centre, apart from being unconstitutional, has deprived the States of their due share in IGST and has adversely impacted their revenues. Under the IGST, the balance due to Telangana till date is Rs 2,812 crore and release the same at the earliest,” State Finance Minister T Harish Rao told Union Finance Minister Nirmala Sitaraman.
In a letter to the Union minister on Tuesday, Harish Rao explained the loss of revenue suffered by the State on account of the procedure followed by the Centre in distributing the unsettled balances of IGST, based on the tax devolution formula.
“There was a balance of `1,76,688 crore left in IGST at the end of 2017-18. This amount was transferred to the Consolidated Fund of India. Out of this, the Centre devolved `67,998 crore under IGST to the States/UTs, adopting Finance Commission’s formula for devolution of Central taxes.
However, the Comptroller and Auditor General (CAG) observed that “devolution of IGST is in contravention of the provisions of the Constitution of India as Article 270 (1) of the Constitution excludes duties levied under Article 269 A (1) from list of taxes and duties to be distributed between the Union and the States.
When the Finance Ministry sent the accounting procedure for IGST, the CAG did not agree it. The CAG observed that the devolution procedure of IGST was against the provisions of Constitution of India,” Harish Rao said in his letter.