Senior Congress leader Siddaramaiah on Saturday alleged that the illegal transfer of Rs 47,272 crore of GSP compensation cess to Consolidated Fund of India was an attempt by the Centre to 'cover up' the shortfall in other collections. Citing the Comptroller and Auditor General's recent report, Siddaramaiah in a tweet charged the central government with betraying the states' trust on federalism and asked Karnataka Chief Minister B S Yediyurappa to initiate legal proceedings for the violation.
"The CAG report reveals that @BJP4India govt has transferred 47,272 Cr of the GST compensation cess collected to Consolidated Fund of India, instead of retaining in the dedicated account to repay the compensation gap. The Central govt has betrayed States' trust on federalism," he said in the tweet.
Pointing out that the cess collected was non-lapsable, which means it should be carried over to the next financial year, the former chief minister said it cannot be transferred to purposes other than the notified purpose. The CAG has found that the Union government in the very first two years of the GST implementation wrongly retained Rs 47,272 crore of GST compensation cess that was meant to be used specifically to compensate states for loss of revenue In its audit report of government accounts, the Comptroller and Auditor General (CAG) flagged that the amount was to be credited to the non-lapsable GST Compensation Cess collection fund for payment to states for loss of revenue due to implementation of GST since 2017, but the government did not do so, and thus violated the GST law.
Targetting the Narendra Modi government over the matter, Siddaramaiah said it has violated terms of GST Compensation Act and should be made liable for the offence. "The illegal transfer of GST cess to consolidated fund is an attempt of Narendra Modi & Nirmala Sitharaman (Finance Minister) to cover up the shortfall in other collections, which arose due to economic slowdown induced by govt's gross mismanagement," the Congress leader alleged.
According to Siddaramaiah, GST cess that was transferred to CFI, could have been used now to transfer to the states when there was a deficit in cess collection. "B S Yediyurappa should initiate legal proceedings for the violation of the act and should reject both the options given to compensate for the GST gap," he advised.