KIRAN CHOUDHRY stresses on early release of full CST compensation claim to Haryana

Jalandhar, February 14, 2013:  Haryana Excise and Taxation Minister Kiran Choudhry has urged the Central Government to release state’s full Central Sales Tax (CST) compensation claim at the earliest.

Total compensation payment of CST for the year 2010-11 must be released within this financial year and the payments for years 2011-12 and 2012-13 may be made in the next financial year maximum in two instalments, she said.

Choudhry was speaking at the Empowered Committee meeting of State Finance Ministers presided over by Union Finance Minister P. Chidambaram in New Delhi today.

She said that Haryana has already consented to the decision of 100 per cent payment for the year 2010-11, 75 per cent for the year 2011-12 and 50 per cent for the year 2012-13 in Executive Committee meeting held recently at Bhubaneswar.  

On the issue of calculation error while settling compensation claim on account of one per cent CST concession granted to Maruti Udyog Limited, she urged that the Revenue Secretary of the Central Government should be asked to expedite the same so that the calculation error could be rectified and the state gets its legitimate claim during this financial year.  She said that senior officials of state government must be called to interact with the concerned officials of the Government of India officials when the compensation claims of Haryana are examined. 

The Minister suggested that Union Finance Ministry should prepare model draft legislations for Central and State governments about proposed design of Goods and Services Tax (GST), which is going to be a major reform in the domain of indirect taxes. She said that today the State Legislatures are supreme in the exercise of their taxation powers within their jurisdiction.  Therefore, it is essential that the fiscal autonomy of the state is given due weightage when the GST is rolled out.

She urged that Haryana be allowed to tax value addition, which the State does on any goods or service which is exported out of the state.  Alternatively a net exporting state like Haryana may be allowed to retain a part of the tax on the interstate sales of goods and services in the GST regime.

On the issue of dual control over the retailers and small traders, Choudhry said that after the GST is rolled out, all retailers or traders above the threshold limit would be technically under the jurisdiction of Central Government officials also, besides being under the State revenue officials.  The Central Government must sort out this issue so that a very large number of retailers and traders do not have to report to two tax authorities. Dual control may be exercised only above a threshold of, say, Rs 5 crores turnover only. 

She said that a standardized design needs to be circulated to all the states for discussion and comments, so that they could upgrade their infrastructure to meet the IT challenge under the GST. At the moment no broad parameters of such an IT framework in terms of Hardware and Software and human skills has been precisely defined. All the member States should switch over to the GST in one go only, she added.

The Minister said that many states including a net exporting state like Haryana can suffer heavy revenue losses in the initial years of GST.  She emphasized on the need to establish a credible and independent mechanism to compensate these losses for at least five years

Those present on the occasion including Chairman of the Empowered Committee Sushil Kumar Modi, Ministers from various States and officers from the Government of India and the State Governments.