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Wednesday, July 6, 2022

‘States’ outbursts against Centre unwarranted’- Mrit News

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Officials say criticism of GST regime, fuel tax structure reflects ‘shameless hypocrisy’

Officials say criticism of GST regime, fuel tax structure reflects ‘shameless hypocrisy’

Taking on the recent spate of “repeated, constant and instant” outbursts against the Centre from some States on fiscal issues, top government officials said on Wednesday that the criticism of the Goods and Services Tax (GST) regime’s functioning based on a Supreme Court verdict last week was as ill-informed as the critique of fuel tax cuts announced last Saturday.

“It is quite clear where the shameless hypocrisy lies. Even before the Supreme Court judgment in a GST matter, where it [the apex court] simply reiterated the existing system, was uploaded for public view, they were holding press conferences stating the court has upheld their fiscal rights,” an official said, hinting at States like Kerala and Tamil Nadu that reacted soon after news broke of an apex court decision scrapping a GST levy on freight services for imports.  

Similarly, while Opposition States like Tamil Nadu criticised the Centre’s plea for them to cut local levies on petroleum products to ease inflation for the common man, the Centre had only ‘exhorted them’ to consider it, not imposed the move as was being implied, the official explained.  

“Yet, the Kerala and Maharashtra governments announced cuts in their State levies after the Centre’s initiative. Why did they feel the need to do so if we were ‘imposing’ on them?” the official underlined.  

On States fretting over losing their revenue powers due to GST and the levy of cess on fuel products ‘thus depriving them of their share of revenues’, the official emphasised that the States were not alone in giving up those powers to operationalise GST.

“As many as 18 cesses levied by the Centre, that yielded over ₹56,000 crore in 2016-17, were subsumed into the GST. This means the funds that were going exclusively to the Centre before GST are now shareable with States because of the shift,” another official pointed out.

The only major cesses levied currently are the GST Compensation Cess, the Health and Education Cess, and the Cess for Central Road and Infrastructure Fund levied on fuel products.

“Over the past two years, in fact, the Centre has provided more funds for these spending heads than cess collections, and that spending is on projects across States — be it on rural roads, highways, optic fibre networks or urban housing. To imply that States are being deprived of funds through the use of cess is misplaced,” the official averred.

States that claim to be managing their economies and inflation levels well must also explain why they have such large outstanding dues to power generation companies, or not accounting for GST revenues correctly, this official noted.


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