The CPI-M-led LDF government in Kerala on Friday, charged the Centre with including certain new clauses in the GST Bill passed in the Rajya Sabha and departing from the consensus arrived at the meeting of Empowered Committee of State Finance Ministers.
In a letter to Union Finance Minister Arun Jaitley, State Finance Minister T M Thomas Isaac claimed the proposed amendment to clause 10 of the bill of the 122nd amendment was not discussed at the Empowered Committee meeting.
He, however, welcomed the passage of the Bill in the Rajya Sabha on Wednesday.
Consensus was only arrived on major issues including no cap on RnR (revenue neutral rate)) in constitution, compensation for the state in full five years for any loss, dispute resolution mechanism to be decided by the GST council, and 1 per cent additional tax for the manufacturing states to be dropped, he pointed out.
However, the clause 10 goes against the decision of the Empowered Committee of 2014 which states the residual amount in the IGST account (The Integrated Goods and Services Tax)shall be shared with the states as per Finance Commission Formula, he said.
The proposed amendment also goes against the basic design that all taxes of the Union in any given year should form part of the divisive pool and should be shared with the states, he said.
The southern state also wanted the Centre to take steps to delete the proposed amendment as reported by the select committee of the Rajya Sabha and ratify contents of clause 10 approved by the Lok Sabha.
“I hope in true spirit of cooperative federalism you will take initiative to abide by the consensus that we all had arrived at, together,” Isaac said in the letter.
Isaac said the state expressed its criticism stating some clauses ran contrary to the consensus arrived at the Empowered Committee.
“Replacing certain clauses which were approved in the Lok Sabha unilaterally is not proper,” he said.
However, the Minister made it clear that the State was not opposing the GST and welcomed the passing of GST by Rajya Sabha.
He also said the GST passed by the Upper House was only a framework and more discussions were needed on several matters including fixing of tax rates.