Plea filed in HC seeking GST compensation for State Legal Correspondent imran

Plea filed in HC seeking GST compensation for State
Legal Correspondent
UPDATED: 04 OCTOBER 2020 01:19 IST

PIL asks for the release of ₹12,250-crore shortfall in collections accrued this year
A public interest litigation petition has been filed in the Madras High Court seeking a direction to the Union Ministry of Finance to implement Section 7 of the Goods and Services Tax (Compensation to States) Act of 2017 in letter and spirit, and consequently release ₹12,250 crore to Tamil Nadu towards compensation for shortfall in GST collections from April 1 to August 31.

Activist G. Sundarrajan of Poovulagin Nanbargal has filed the case through his counsel M. Radhakrishnan. He contended that the failure of the Centre to comply with the statutory requirement and release the money, to compensate the shortftall in GST collections in the State, would amount to violation of the fundamental right to life guaranteed under Article 21 of the Constitution.

He pointed out that GST was introduced in the country through the Constitution (one hundred and first Amendment) Act of 2016 and Section 18 of that Act stated that the Parliament would, by law, on the recommendation of the GST Council, provide for compensation to the States for loss of revenue, for a period of five years, on account of implementation of GST.


It was in view of such a guarantee, the 2017 Act was notified by the Centre on July 1, 2017. As per Section 7 of this Act, the compensation payable to the States should be calculated provisionally and released to them at the end of every two months. The quantum should also be calculated for every financial year, after the receipt of final revenue figures, and settled.

However, the Centre had not paid the compensation to Tamil Nadu since April, he said and referred to a letter written by the Chief Minister to the Prime Minister last month. The contents of the letter were released to the media on August 31 and it was stated therein that Tamil Nadu had agreed to the implementation of GST only on assurance of compensation for any loss of revenue.

“It is also released from the press release dated August 31 that a total sum of ₹12,250 crore is due to Tamil Nadu as compensation for the shortfall in GST collections of which ₹11,459.37 crore has accrued from April to July,” the petitioner said and sought for a direction to the Centre to release the amount forthwith.

Further contending that he had all the locus standi to file the present PIL petition, the litigant said he had filed the case to discharge his fundamental duty, under Article 51A(j) of the Constitution, to strive towards excellence in all spheres of individual and collective activity so that the nation could constantly rise to higher levels of endeavour and achievement

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