Lack of trust, friction between the Centre and states is a result of the erosion of faith in the Centre administering GST fairly. Do you agree with this view? Comment (200 Words)
Refer - Indian Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 4 years
KEY POINTS
· The compensation cess, or lack thereof, has placed the states under a great amount of financial stress. Inevitably, the central and state tax administrations will resort to creative means to increase tax collections, causing a great amount of paint to businesses.
· Information obtained under the RTI Act reveals that ITC of approximately Rs 210 crore of businesses assessed by central tax officers in Punjab, Haryana, Himachal Pradesh and J&K has been blocked.
· This amount excludes information from some major jurisdictions, such as Central Tax Gurugram, which claims not to maintain a record of this information.
· The GST law, through a web of complex provisions, determines the state to which the business must pay the tax. State governments are bound to use this complexity to ensure that taxes are to be paid in their respective state.
· The Centre enacted a law which assured that the revenue from the states will grow year on year by 14 per cent (while our economy was growing at just under 7 per cent) and the shortfall in revenues, which did not match the projected growth, would be made good by the Centre.
· In the long term, this fiscal desperation could lead to the emergence of varying degrees of rogue states. “One Nation One Tax” is balanced on a common set of rules applicable from Kashmir to Kanyakumari.
· States could refuse to adopt the administrative orders issued by the central government leading to different interpretation and implementation.
· This would lead to an interesting constitutional crisis, where the Supreme Court will be forced to address the question of whether a state legislature, comprising of democratically-elected members, is sovereign or is it subservient to an executive body with recommendatory powers — the GST Council.
