NEW DELHI: Today’s GST Council meeting promises to be a stormy affair with the Centre and Opposition-ruled states not just divided over compensation for a “shortfall” in collections but also on the issue of a dispute resolution authority being pushed by Opposition-ruled states.
The demand was first echoed by Punjab soon after the Centre presented the new mechanism to borrow and extend applicability of the compensation cess. But the proposal has been rejected by the government, with officials arguing that it was shot down in 2011, with the standing committee on finance then headed by former FM Yashwant Sinha and subsequently by the GST-empowered committee chaired by Bihar deputy CM Sushil Kumar Modi also rejecting it.
“The idea of the GST dispute settlement authority is against the very basic tenets of the Constitution, which are based on the principle of separation of powers and clearly defines the sovereignty of the legislature. Such a proposal, though already rejected by Parliament, would be akin to suggest that if there are some disputes among the political parties in Parliament or say, between Rajya Sabha and Lok Sabha, then such disputes be referred to a judicial body,” said a source.
The Constitutional amendment for GST provided for the GST Council, comprising state and Union finance ministers, to evolve a mechanism. Flowing from that, the all-powerful decision-making body has referred some of the issues to various ministerial panels and committees, comprising officers to evolve a consensus on some of the contentious issues.
But the main flashpoint is expected to be the Centre’s decision to support states in borrowing Rs 97,000 crore to overcome the compensation shortfall, when the overall gap is estimated at over Rs 2.3 lakh crore. While the Centre is pointing to having the numbers through support of 21 states and Union territories to back its plan, the Opposition-ruled states are not yet on board.