Page 38 - GSTL_3rd September 2020_Vol 40_Part 1

J20 GST LAW TIMES [ Vol. 40
He added that the dispute resolution mechanism provided under Section
279 of the Constitution should be activated, for States have a legal recourse if
there is something they did not agree with.
Badal added that the Centre should pay a third of the deficit from the
consolidated fund of India, and the remaining two-thirds may be borrowed in
the sixth or seventh year.
He further pointed out that the ` 54,000 crore of the remaining Integrated
GST money, which was wrongly deposited to the consolidated fund of India,
should be credited back to the IGST so that compensation may be paid.
“The Government has played with the country’s economy. Almost every
State is seeking compensation. It was projected that the revenues would grow as
leakages come down, and the GDP increases, a proposition that seemed realis-
tic,” added Badal.
In fact, even BJP-ruled States such as Karnataka recommended that the
Central Government borrow to compensate the States. Bihar, too, gave two op-
tions, the first being that the Central Government borrow and give it to the
States, and the second being that the States be allowed to borrow with certain
conditions such as low interest rates, an increased FRBM limit, along with the
condition that the Central Government facilitate the borrowing.
Some States even read out the minutes of the GST Council’s 6th, 7th and
8th Meeting, and picked up recorded minutes of the previous FM and previous
Revenue Secretary to remind the Centre of its obligation.
Sisodia highlighted that ever since the GST implementation, neither had
inflation reduced nor had revenues increased for States, as was earlier projected.
Further, 70 per cent of States’ taxation rights had been subsumed. When
all States are suffering from a revenue shortfall, the Centre is going back on its
promise of fully compensating States for the deficit.
Jayanta Roy, Group Head (corporate sector ratings), ICRA, said that with
the aggregate protected revenues of States - estimated by the rating agency at
` 7.65 trillion for FY21 - the GST compensation requirement appears set to more
than double to ` 3.64 trillion for the current fiscal year, from the ` 1.65 trillion in
FY20.
[Source : Business Standard, New Delhi, dated 28-8-2020]

Interest on GST can be paid on net basis : Government
The Centre has notified that interest payments due on delayed Goods
and Services Tax (GST) can be serviced on a net basis from September 1. Net ba-
sis means that input tax credits and refunds will not be accounted for when levy-
ing interest and only the tax liability discharged in cash will be taken for consid-
eration.
After criticism came from many quarters that the decision should have
been made with retrospective effect (from July 1, 2017) in line with the GST
Council decision, the Central Board of Indirect Taxes and Customs (C.B.I. & C.)
attributed the prospective nature of the notification to “certain technical limita-
tions”.
Sources said the CGST Act had to be amended for making the move ret-
rospective which could not be done due to COVID-19 situation.
GST LAW TIMES  3rd September 2020  54
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