Haryana has asked the Union government to pay a total of Rs 2,939.84 crore — Rs 1,046.21 crore to make good the shortfall on account of the compensation claim filed by the state for three years and Rs 1,893.63 crore paid less in claims on the Central Salex Tax account.
The purchase tax on foodgrains should be kept out of the purview of the Goods and Service Tax (GST) and, if subsumed, a provision should be made to compensate Haryana on a permanent basis for the loss.
These demands were made by Haryana Minister for Excise and Taxation Kiran Choudhary, while speaking at a meeting in Delhi of the empowered committee of state finance ministers.The meeting, chaired by panel chief Sushil Kumar Modi, was attended by ministers from various states and officers of the Central and state governments.
Choudhary called for early finalisation of broad contours of the GST, adding that steps should be expedited to introduce GST at the earliest.
Referring to the compensation claims for three years 2007-08, 2008-09 and 2009-10, she said Haryana had filed compensation claim for Rs 4,015.23 crore, but got only Rs 2,969.02 crore. The Centre made a reduction of Rs 1,046.21 crore on account of the arbitrary assumption of revenue gain accruing to Haryana following the abolition of Form-D on inter-state sales. “The Centre must review its stand and pay the amount.”
On the issue of CST claim for Rs 2,249.63 crore filed for 2010-11, Choudhary said Haryana had received only Rs 356 crore. “The Centre may provide the balance compensation to the state at the earliest and should also take a decision with regard to CST compensation on similar lines for the current financial year 2011-12.”
Choudhary reiterated Haryana’s oft-repeated demand that like petroleum products and liquor, purchase tax on foodgrains should be kept out of the GST regime. “The amount of purchase tax being collected by the state is minuscule in comparison to the expenditure made in providing huge subsidies and incentives to its farmers leading to excess production of foodgrains which is being contributed to the national kitty. Needless to say, Haryana, along with Punjab, has made a huge contribution in providing the country the much-needed food security. However, if due to any reason, a decision is taken to subsume purchase tax in GST, Haryana would insist on making a provision for compensation on permanent basis for the loss that would be suffered on account of subsumation of purchase tax,” she said.
Since the introduction of GST got delayed and no consensus prevails over the date of its introduction, the Centre, she said the issue of CST compensation might have to be re-discussed and re-negotiated with the Centre. “Though it is correct that the Central government was required to give CST compensation initially for only three years, the provision for compensation for three years was kept when GST was expected to be introduced. The present position is that the GST has not been introduced, the rate of CST continues to be at two per cent and states like Haryana are incurring huge losses regularly.”
At its last few meetings, the Empowered Committee has been regularly deliberating upon the proposed Constitutional Amendment Bill, and Haryana has always emphasised that the state is broadly in agreement with its provisions and has already sent its detailed comments to the Empowered Committee Secretariat.
Haryana has been regularly submitting VAT revenue collection statements to the empowered committee. The growth rate of revenue from VAT and CST in the first quarter of the financial year was about 22 per cent as compared to the first quarter of the previous year.