Abide by constitutional responsibility on GST compensation to states: Panneerselvam to Centre

The Centre should abide by its constitutional responsibility to provide GST compensation dues to state governments in full for five years, Tamil Nadu Deputy Chief Minister O Panneerselvam on Wednesday said.

Participating in the Pre-Budget meeting held by Finance Minister Nirmala Sitharaman with state finance ministers here, he said her predecessor Arun Jaitley had given assurances in this regard during GST council meetings.

"The Centre's taxation measures have impacted states" he said, adding, "Tamil Nadu was one of the best performing states in GST (Goods and Services Tax) collection".

The issue of GST distribution dues to states from the Centre still remains a serious concern.

Panneerselvam, who also holds the finance portfolio, claimed that the Centre is yet to provide Tamil Nadu the IGST arrears of 2017-18 of Rs 4,073 crore.

During the 37th meeting of the GST Council, it was indicated by the Centre that the "obligation to pay the compensation is subject to the availability in the GST Compensation Fund," he said.

"I would like to state emphatically that the obligation to provide GST compensation is not restricted to the amount of available compensation cess.

"The Union government is constitutionally obliged to make good the States for any shortfall in GST collections," the deputy chief minister said.

Similarly, the Centre has been depriving states of their legitimate share of revenue "through resort to the levy of cess and surcharges. This should be reversed", Panneerselvam said.

Likewise, the state is yet to receive arrears of Rs 3,369.06 crore towards grants to local bodies as recommended by the 14th Finance Commission. "This includes performance grants for 2017-18 and 2018-19 amounting to Rs 1,196.27 crore and Rs 2,172.79 crore towards basic grants for 2019-20", he said.

"The performance grants has not been released to any state so far. This is unfair. The seamless functioning of local bodies is essential for effective last mile delivery of public services," Panneerselvam said.

Paucity of funds will be detrimental to local bodies' capacity to perform essential services, he said and sought early release of arrears pertaining to the 14th Finance Commission grants.

The deputy chief minister also recalled various water augmentation and infrastructure projects of Tamil Nadu pending with the Centre and sought for their speedy clearance.