Punjab rejects options on GST compensation, seeks rethink

Chandigarh, Aug 31 Rejecting the two options offered by the Centre for GST compensation to the states, Punjab Finance Minister Manpreet Badal on Monday asked Union Finance Minister Nirmala Sitharaman to reconsider the decision.

Terming the decision a "clear breach of the solemn and constitutional assurance", he, in a letter to Sitharaman, said it would be considered a betrayal of the spirit of cooperative federalism that formed the backbone of Goods and Services Tax (GST) journey so far.

Punjab would like full clarity on each of these issues and that the matter is once again placed on the agenda in the next meeting of the GST Council, he said.

Manpreet Badal also suggested constituting a Group of Ministers to deliberate on the matter and make recommendations in a time-bound period of 10 days.

Punjab is prepared to cooperate in a spirit of finding a solution to this vexed problem but is unable to persuade itself to either of the options presented at this stage, he said.

He drew attention towards the statements of the then GST Council Chairperson that the compensation would be 100 per cent of the revenue loss; it would be paid within five years; it is the Central government that has the obligation to pay; only the manner of funding was to be decided by the Council; and if there were to be shortage, the required funds could be borrowed.

Manpreet Badal said the Union government is unable to persuade itself to agree with these submissions and has now offered the two options, breaking from a recorded past that has force as good as that of law.

The constitutional provision itself expects that the central law on compensation shall be made in accordance with the recommendation of the Council, he said, adding that any law which doesn't recognise this recommendation is thus unconstitutional.

( With inputs from IANS )