Unlikely allies band together in fight against Centre on GST issue

New Delhi: Chief ministers of seven non-NDA ruled states on Wednesday vowed to put up a united fight over the issue of non-payment of GST compensation to states by the Centre and to protect the federal structure.

At a meeting called by Congress president Sonia Gandhi, the chief ministers of Maharashtra, Jharkhand, Punjab, Rajasthan, Chhattisgarh and Puducherry, where her party is in power on its own or in an alliance, and West Bengal called for a joint action on the GST issue and decided to collectively petition the prime minister at the earliest.

Maharashtra Chief Minister Uddhav Thackeray and his Puducherry counterpart V Narayanasamy even suggested a rethink on the implementation of Goods and Services Tax (GST).

The remarks came ahead of the GST Council meeting on Thursday which is likely to be a stormy affair as opposition-ruled states unite to pressure the Centre to give them the promised compensation for loss of revenue arising from the implementation of GST.

Supporting the demand for postponement of NEET and JEE examinations in view of the coronavirus pandemic, the chief ministers also decided to jointly move the Supreme Court on the issue, sources said.

Sonia Gandhi, who had convened the virtual meeting to discuss a range of issues ahead of the Parliament session, set the ball rolling for opposition offensive on the GST matter, accusing the Centre of "betrayal".

She said the government has reportedly told the Parliamentary Standing Committee on Finance that they are not in a position to pay the mandatory GST compensation of 14 per cent for the current year.

"This refusal to compensate the states is nothing short of betrayal by the Modi government and a betrayal of trust of the people of India," she said at the meeting.

Gandhi noted that the GST was enacted as an example of "cooperative federalism" and the GST regime came into existence because the states agreed to forego their constitutional powers of taxation in the larger national interest and on the solemn promise of compulsory GST compensation for a period of five years.

She also argued that the issue of GST compensation being paid to states on time according to the laws passed by Parliament is crucial but this is not happening and dues have accumulated and the finances of all the states have been affected badly.

All the chief ministers rallied behind Sonia Gandhi and accused the Centre of squeezing their funds in COVID times.

Chief ministers Mamata Banerjee, Uddhav Thackeray and Hemant Soren also called for an aggressive opposition strategy to counter the BJP.

"We should decide whether we have to fight or fear," Thackeray said at the meeting.

Gandhi said she agreed with Banerjee and Thackeray that all opposition-ruled states should together fight the Centre for their rights.

"We have to work together and fight together against the central government," said an assertive Gandhi, who had on Monday survived a challenge to her leadership by a section of her party colleagues.

Banerjee earlier said the situation was "very serious" and opposition-ruled states should fight unitedly.

She also alleged that state governments are being "bulldozed" and their rights are being curtailed by the Centre in the name of cooperative federalism.

"Our government is yet to get Rs 53,000 crore from the union government. The federal structure is being bulldozed. It is using central agencies against the state government. No one is allowed to talk against the central government," she said.

Sonia Gandhi,  in her opening remarks, said that the government was looking at the students' issue "uncaringly".

Banerjee then urged other CMs to jointly move a review petition in Supreme Court seeking postponement of JEE-NEET  competitive exams, saying the students are facing a lot of hardships.

Punjab Chief Minister Amarinder Singh endorsed her demand, saying the atmosphere is not conducive for holding exams physically as the number of COVID cases were rising.

It was the first such meeting of non-BJP chief ministers since the outbreak of COVID-19 pandemic.

Thackeray said the country needs to think if the old tax regime was better than the GST, and also expressed worry about the alleged "concentration" of power.

He said the federal structure of the country must be protected.

"The GST share of states expected from the Centre is rising. I have been writing letters for expeditious release (of state's share). But since April we haven't got any. If we get a reply, we don't get money," he said.

"If we are in opposition, it is not that we don't wish well for other political parties. We too are representatives of people. We also have rights," said Thackeray, who broke off his party's alliance with the BJP last year.

Talking about former PM Rajiv Gandhi introducing Panchayati Raj to usher in the decentralization of power, he alleged that all power is concentrated in one hand now.

It was important to protect the federal structure of the country as envisaged in the Constitution, Thackeray said.

"If we don't respect the Constitution, what is the use of democracy?" he asked.

Amarinder Singh said, "We have given all the powers of taxation through the GST, and now they say they may not be able to pay. So how do we run our states?"

Calling upon the states to work together and fight together for their rights, he said,  "If the Government of India does not give us our GST compensation how do they expect us to function."

Hemant Soren said the opposition was looking "weak" in the country presently and "we all need to unitedly fight against the Centre's wrong policies".

He sought adequate GST compensation for the states to fight the pandemic crisis.

Soren alleged that the Centre's "discriminatory" approach towards the opposition ruled states was "clearly visible" which should be fought together and called for strengthening opposition unity.

"The central government is trying to create differences between the opposition parties so that they remain busy fighting each other and do not point fingers on their wrongdoings," he said, and called for efforts to "foil the conspiracy".

He raised the issue of GST and made a strong case for compensating the states to help them fight problems arising due to the COVID-19 pandemic.

Puducherry CM Narayanasamy said if the Centre does not pay them their dues and does not provide compensation as per laws, they would rather return to the old system and collect their own taxes.

The 41st meeting of the Goods and Services Tax (GST) Council, to be held via video conferencing, has just one agenda for discussion -- making up for a shortfall in states' revenues, sources said.

The options being explored are market borrowing, raising cess rate or increasing the number of items for levy of compensation cess.