Kerala moots legal challenge on GST compensation taking non-BJP states into confidence

Following Centre's decision regarding GST compensation to states and the GST arrears to Kerala piling up to the tune of Rs 40,000 crore, Kerala is planning to take a legal recourse after taking other state governments into confidence.

"If GST council is not able to come with a solution regarding dispute settlement than states together should move to the Supreme Court over the issue. I am putting this proposal before other Finance Ministers,' said Kerala Finance Minister Thomas Isaac.

The next ministerial-level council meet is scheduled to be held on January 18 in Delhi.

When asked if he would gain support from other Finance ministers of different states on the issue, Isaac said, "In next council meeting I will be discussing with like-minded finance ministers about the possibility of approaching Supreme Court to protect state rights, something which has been guaranteed by the Constitution and are very clearly laid down on the law passed by the Parliament. Most of the non-BJP finance ministers are in support of this".

He also proposed the GST council to be allowed to borrow to meet the GST compensation arrears.

"The GST compensation arrears to Kerala are about Rs 40,000 crore if not more" he stated.

Thomas Isaac said that GST compensation and Central share of the taxes have been drastically reduced for the last quarter.

"As far as our budgeted figures, Kerala should have received something like Rs 10000 crores public borrowing in the last quarter, instead we got Rs 1900 crore. The reason cited is that Kerala had over-borrowed in 2016-17. It will be difficult for the state government. Even if the centre wants to do this, do it over time. Don't do it in the height of the slowdown. All state governments are forced to reduce their expenditure as centre transfers are getting reduced", he said.

He also voiced concerns over the state coffers and said that Kerala has been pushed to a very serious financial crisis due to these reductions.

"'Regarding centrally sponsored schemes the centre owes arrears of Rs 1200 crores for employee guarantee programme. Now for paddy procurement centre government owes to Kerala more than Rs 1000 crores. This kind of system never existed before. There was always been some consideration for the plights of the state. Now there is very little dialogue. This is totally new phase in central state relation we are witnessing", Isaac said.

He also blamed centre for the exclusion of Kerala from 2019 flood relief and said that the move was 'political as well as ideological'.

"For the first time the centre is ruled by a party that does not believe in diversity. So there is a lack of appreciation for the aspiration of the regions", he said.