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Bring back atmosphere of trust in GST Council, Amit Mitra to FM

The Finance Minister of West Bengal, Amit Mitra, has written to Union Finance Minister Nirmala Sitharaman expressing his dismay over the 'steady breakdown of the spirit of cooperative federalism and the erosion of commitment', urging her to 'work out a consensus in the GST Council Meetings' to bring back the atmosphere of trust that had defined the Council since its inception.

Updated Jun 23, 2021 17:45 PM

Bring back atmosphere of trust in GST Council, Amit Mitra to FM

In a three-page letter to Sitharaman, Mitra alleged that the GST Council meetings have become "acrimonious, vexing and almost toxic with the erosion of the mutual trust that had held fast between states and the Centre" since the Council's inception.

He even recalled instances when the Government of India had yielded to the suggestions of a lone voice from a state, and the states in turn yielded to GoI's proposals despite reservations.

"I recall many instances when the GoI (The Chair) yielded to suggestions even from a lone voice from a state and in turn, states yielded to Gol proposals despite reservations. The Council vehemently debated over thousands of pages to formulate the GST Law, IGST Law and GST Compensation Law without any bitterness or antagonism.

"I recall that the possibility of a consensus almost broke down over how taxpayers would be divided between Centre and states (vertical or horizontal formula) ending with a consensus on a 1.5 crore threshold, as proposed by the states. But now I am afraid that arriving at such a consensus, even for much simpler matters, has become elusive," Mitra wrote.

Alleging that presently there is the prevalence of a narrow view political majoritarianism in the GST Council, Mitra said, "I urge you Honourable Minister to kindly introspect on what I have taken the liberty of bringing to your attention with utmost sincerity and frankness, so that you may consider a course correction in the matter of functioning of the GST Council.

"Frankly speaking, Honourable Minister, an undercurrent has emerged in recent times that while the Chair hears the submissions of all states patiently, indeed, there is a predetermined conclusion with which the Government of India, aided by its top bureaucrats, comes to the GST Council meetings."

Citing example, Mitra said, "Many of us as ministers are also concerned that the GST Implementation Committee (GIC) consisting of officers from a few states and mainly from the GoI, has started amending rules and presenting them only for the information of the GST Council -- not for discussion and ratification.

"When the GIC was meant only for procedural issues, it amended Rules 8 and 9 on Registration, Rule 21, Rule 21A, Rule 59, Rule 86B and Rules 138 and 138A on the vital issue of e-Way Bills. You would agree that such amendments and their implementation by the GIC are undermining the powers of the GST Council.

"Hon'ble Minister, it would be the time for us to pull together and rebuild trust and faith, not just hear but to listen to each other's logic with an open mind as we have done for many years in the past, when we cut across party lines and regional diversities."

"We are passing through dangerous times for the GST regime itself, when states' own revenues are in dire stress with a growth of (-) 3 per cent during FY 2020-21. The gap between protected revenue and revenue collected has ballooned to Rs 2,75,606 crore. The actual compensation due to the states for 2020-21 has reached Rs 74,398 crore. Fraudulent transactions hit a peak of Rs 70,000 crore, according to Nandan Nilekani's presentation to the GST Council," Mitra said.

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