States plan political battle over delayed allocation of GST compensation

Some of the states with non-Bharatiya Janata Party (BJP) governments believe the Centre is pushing them into a corner over delayed allocation of goods and services tax (GST) compensation cess, leaving them with little option but to fight the battle politically.

These states are planning to pass resolutions in their legislative assemblies; however, such tactics will be used as the last resort if the Centre continues to stall allocations.

Some of these states, particularly Chhattisgarh, also oppose a hike in GST rates, saying this would harm their interests and only benefit the Centre. “We will oppose the increase in GST rates. 

It is against the interests of the producing states,” Chhattisgarh Chief Minister Bhupesh Baghel said.

Baghel has flagged the issue of GST compensation cess as well as how his state is losing revenue because of reversal of the coal block allocation policy to auction since 2014. He has raised the issue of revenue loss to his state in coal block auctions in a letter to Prime Minister Narendra Modi in April, and during NITI Aayog meetings.

Apart from planning a united political battle on the issue, non-BJP-run states — Kerala, West Bengal, Punjab, Delhi and Chhattisgarh, Madhya Pradesh, Rajasthan, and the Union Territory of Puducherry — could move the Supreme Court.

Sources said these states were waiting to exhaust all options before escalating their battle with the Centre by knocking at the doors of the Supreme Court, passing resolutions in legislative assemblies and taking out united protests.

The GST Council has formed a committee of officers from states and the Centre to suggest measures for increasing the GST revenue. Finance ministers and representatives of these states had met Finance Minister Nirmala Sitharaman last week.