Kerala to approach SC if there are any issues in GST compensation by Centre, says Thomas Isaac

After the GST Council meeting concluded without reaching any consensus for the second time in two weeks, Kerala Finance Minister Thomas Isaac on Tuesday said that Kerala will approach Supreme Court with all the nine states opposing Centre's two borrowing options for GST compensation if there is an issue.

"Kerala has already declared that it will approach the Supreme Court if there are any issues. Kerala will speak with other states in the coming days. If Kerala goes to Supreme Court, it will be all nine states together," Isaac said while addressing the media.

He said that GST Council meeting concluded without reaching any consensus for the second time in two weeks on Monday, as nine states were not ready to accept both the options and the minister of Maharashtra did not join the meeting.

"This year's compensation to states is Rs 2.3 lakh crore, and of this, states are asked to borrow Rs 1.1 lakh crore. Kerala has strongly argued that compensation should not be postponed to the future. If such compensation is to be deferred beyond five years, the GST Council must formally decide. That is what the law dictates. That is what (is) the Attorney General's opinion. No such decision has been made in the Council," he stated.

Earlier, in a series of tweets, Isaac said that Union Finance Minister's announcement about permitting 21 states to borrow as per option one (proposed in 41st GST council meeting) is illegal, as no such decision was taken in the Council meeting.

"Union Finance Minister's announcement that she is going to permit 21 states to borrow as per Option one is illegal. Option one involves deferment of compensation payment beyond 5 years for which a Council decision is necessary as per AG's opinion. No such decision has been made in the Council," Isaac tweeted.

He said Union Finance Minister's move of not proposing the decision in the Council, but announcing the same in the media is "unfortunate".

"It is unfortunate that the Union Finance Minister does not propose a decision in the Council or even make a statement about what she is going to do but chose to make the announcement in the press conference. Why does the Centre refuse to take a decision in Council," he asked in another tweet.

"An example of fiscally prudent stimulus policy of Central government: Rs 12000 cr 50-year interest-free additional loan to states. Kerala is entitled Rs 200 cr. Total disregard for democratic norms. Some stimulus indeed," he added.

In the 41st meeting held on August 27, the GST Council presented two options to states regarding GST compensation including a special window in consultation with the Reserve Bank of India (RBI) to provide Rs 97,000 crores at a reasonable interest rate and that the entire GST compensation gap of Rs 2,35,000 crores this year which can be met by them in consultation with RBI.

( With inputs from ANI )