GST ?||GST Compensation: Why onus is on center?||
The centre abdicating its responsibility to ensure payment of GST compensation due to states is not only anti-federal move but poses an existential threat to much-touted goods and services tax(GST).
Several states, especially the manufacturing ones expressed apprehensions of fall in tax revenue due to the implementation of GST, which is a destination based tax. But, the center assured states of a minimum 14 % annual increase in tax revenue from the year 2015-16. The center has also promised compensation in case such a targeted revenue is not realised. But the government of India now invokes act of god to violate the act of parliament.
The act of god is normally invoked in contractual obligations. But, extending it to a legislation enacted by parliament enabled by a constitutional amendment is not just a flawed understanding, but, a betrayal of a solemn commitment. This would have far reaching implications for the much needed trust between centre and states in a federal system.
Surprisingly enough, centre makes flimsy reasons to defend its unilateral stand. The union finance minister suggest that the states will be allowed to borrow more to meet GST shortfalls. It says that Indias credit rating will be adversely affected if the centre borrows instead of states. But, rating agencies calculate tax to GDP ratio and fiscal deficit for the country as a whole that includes centre and the states.
Not To Pay GST Compensation To States Is Constitutional Default: Prof K Nageshwar
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GST ?||GST Compensation: Why onus is on center?|| The centre abdicating its responsibility to ensure payment of GST compensation due to states is not only anti-federal move but poses an existential threat to much-touted goods and services tax(GST). Several states, especially the manufacturing ones expressed apprehensions of fall in tax revenue due to the implementation of GST, which is a destination based tax. But, the center assured states of a minimum 14 % annual increase in tax revenue from the year 2015-16. The center has also promised compensation in case such a targeted revenue is not realised. But the government of India now invokes act of god to violate the act of parliament. The act of god is normally invoked in contractual obligations. But, extending it to a legislation enacted by parliament enabled by a constitutional amendment is not just a flawed understanding, but, a betrayal of a solemn commitment. This would have far reaching implications for the much needed trust between centre and states in a federal system. Surprisingly enough, centre makes flimsy reasons to defend its unilateral stand. The union finance minister suggest that the states will be allowed to borrow more to meet GST shortfalls. It says that Indias credit rating will be adversely affected if the centre borrows instead of states. But, rating agencies calculate tax to GDP ratio and fiscal deficit for the country as a whole that includes centre and the states. https://www.gulte.com/political-news/22472/not-to-pay-gst-compensation-to-states-is-constitutional-default-prof-k-nageshwar