Odisha asks Centre to win its trust by paying arrears

Bhubaneswar: Asking the Centre to win confidence of the states before implementation of the GST, Odisha government on Friday said it need to be paid compensation of Rs 3,417.13 crore towards reduction of the rate of CST from 4 per cent to 2 per cent.

“The state has claimed Rs 4720.21 crore as compensation towards CST reduction from 2007-08 to 2013-2014, but it has received only Rs 1,303.08 crore till now,” Finance Minister Pradip Kumar Amat told reporters after attending the meeting of the Empowered Committee of State Finance Ministers at New Delhi yesterday.

Stating that non-release of compensation on account of loss towards CST reduction has caused trust deficit between the Centre and the states, Amat said, “The Centre should release the balance amount of compensation Rs 3,417.13 crore to infuse confidence in the states to move towards implementation of GST.”

In Odisha, Amat pointed out that the entry tax is collected in lieu of Octroi. It was decided in the Empowered Committee that Entry Tax in lieu of Octroi would not be subsumed in GST.

During the year 2013-14, Odisha collected Rs 1,618 crore as entry tax. While calculating the compensation for the state, the revenue loss on account of subsumation of Entry Tax may be taken into account, he said.

“The mechanism for compensating the states should also be of a permanent nature, as the Parliamentary Standing Committee on Finance has recommended, there should be a built-in permanent, independent, automatic compensation mechanism in the Constitution itself,” Amat said.

The mineral producing states may be empowered to levy an additional non-rebatable cess subject to suitable framing of guidelines in consultation with the proposed GST council, the finance minister said.

In the Constitution Amendment Bill, Amat said it is proposed that every decision of the GST Council shall be taken at a meeting by a majority of not less than 3/4th of the weighed votes of the members present and voting.

In the re-revised draft Constitution Amendment Bill, the Central Government’s power to levy tax on tobacco and tobacco products is retained, whereas, state governments are not given power to impose tax on tobacco and tobacco products, he said.

However, to discourage the consumption of tobacco and tobacco products, Amat said, “Tobacco and Tobacco products” should be included in Entry 54 of the state List so as to enable the states to levy tax on it in addition to GST.