Truce on compensation evades GST Council meet, yet again

Ten state governments have opposed the proposals of the Centre arguing that they were against the federal structure and there was a need to establish a mechanism to rule on disputes.

“We are close to causing irreparable damage to One-Nation-One-Tax concept that is the soul of the Law," Punjab finance minister Manpreet Singh Badal told the meeting, according to an official statement. He added that he had suggested a group of ministers (GoM) on the subject be formed and he was sure that the Group would be able to look at the issues with “calmness and in far greater spirit of accommodation of concern of all."

Badal said the Group of ministers would also serve as a proxy for a dispute settlement mechanism and demanded that the GoM be announced at the end of the meeting. He said it should submit a detailed report after speaking to all stakeholders in the next 48 hours. “We are thus close to setting up some dangerous precedents. Goodbye to Constitution. Goodbye to compensation law. Goodbye to minutes of the council meetings. Goodbye to learned Attorney General’s opinion,’’ Badal added.

Speaking to reporters after the meeting, Union finance minister Nirmala Sitharaman said that there was no consensus on the issue of borrowing.

“Majority of states have opted for Option 1 which are asking for borrowing as soon as possible. On the other hand, there are states which are saying we should decide on the basis of consensus. The discussion went on for some time and at the end of the meeting, there was no consensus arrived on a matter on which differences exist," Sitharaman told reporters. “There are differences but there is no dispute. Everyone of us agrees that the entire compensation needs to be paid which will be paid. While I respect there is no unanimity, I also said that can members of Council stop other states from doing what they want to do."

This is the third attempt to reach a consensus on the issue of compensation but this has eluded the Council so far.

“Union FM’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," Kerala finance minister Thomas Isaac tweeted late on Monday.

gyan.v@livemint.com