Kerala FM fires salvo at Centre over fuel surcharge, says GoM meet Nov 27

Will raise state woes on 15th finance commission at GST Council

Training guns on the Centre government again on fuel taxing, Kerala finance minister K N Balagopal has said that the Narendra Modi government's act of taking surcharges on fuel is unconstitutional and is hampering federal ties.

Balagopal also told Business Standard that a Group of Ministers (GoM) is scheduled to meet on November 27 to discuss key issues like rationalisation of rates and also changes to the slab structure of the Goods and Services Tax (GST).

The committee, which is yet to take up the merger plans for the 12 per cent and 18 per cent slabs, is likely to take the matter up in the upcoming meeting, in addition to the revision of tax rates in various items including gold and silver. The GoM is headed by Karnataka Chief Minister Basavaraj Bommai.

The next meeting of the GST council is likely to happen in December. Balagopal said that the impact of the 15th finance commission on the state's finances was to the tune of around Rs 6,400 crore and the state will take up the matter in the GST council.

In terms of fuel, stand by the Kerala government is that the Centre's charging structure is against article 271  of the constitution, which provides the provision for taking surcharges over the basic excise duty.

"Surcharges and additional excise duties should not be higher than basic excise duty and it can be charged only for some specific purposes like natural calamities, war or pandemic. Now, these rates are higher than basic excise duty and are also being charged for a long period. This is against constitutional provisions," Balagopal said.

The centre had collected Rs 3.72 trillion in the form of excise duty, cess and additional excise duty. However, out of this, only around 5 per cent or Rs 18,000 crore came as the basic excise duty, 41 per cent of which was shared with the states. The remaining 95 per cent or Rs 3.54 trillion had gone directly to the Central exchequer. "This is a misuse of the provisions of the constitution and they are taking away the legal share of the states," he added.

Regarding the 15th Finance Commission, he said, "The 15th finance commission affected Kerala in a big way to the tune of around Rs 6,400 crore. The compensation factor we will discuss again in the GST council." The rate of central tax revenue to the state has dipped from 3.5 per cent during the 10th Finance Commission to 2.5 per cent during the 14th finance commission and 1.94 per cent now. Because of our development, per capita increases. They are ranking in a separate way. For developed states, this is a huge loss," he added.

Early this month, the finance minister had criticized the Comptroller and Auditor General of India (CAG) over the Kerala Infrastructure Investment Fund Board (KIIFB) over its findings that the state violated the Kerala Fiscal Responsibility Act going for “off-budget borrowings” via masala bonds and other instruments through KIIFB. He added that the auditor had simply echoed its previous report, which was rejected by the state assembly in 2019.