CHENNAI: Charging the Centre with causing huge revenue losses to States, including Tamil Nadu, by taking unilateral and unreasonable decisions with regard to Central Sales Tax (CST), Chief Minister J Jayalalithaa on Saturday sought Prime Minister Manmohan Singh’s intervention to sort out the issues expeditiously.Taking exception to the decision to stop CST compensation from 2011-12, the CM observed that CST rate was reduced only as a precursor to the introduction of Goods and Services Tax (GST). Since it was the Centre’s responsibility to introduce GST by evolving a consensus and by putting in place appropriate mechanisms, the States could not be expected to bear the loss on account of its failure to introduce GST. The Centre had a moral responsibility to compensate the States till GST was introduced.Stating that States like TN were suffering huge revenue loss on account of the CST rate reduction, the CM said TN could have realised an additional revenue of `2,000 crore between 2007-08 and 2010-11, even after taking into ac count the Centre’s compensation. “This tax loss pushed back the revenue base to a lower level and the State continues to suffer incremental revenue loss, which is in the range of `1,500 crore to `2,000 per annum in the next three years,” she said. She also pointed out that such unilateral and unreasonable actions by the Centre did not augur well for fostering a spirit of co-operative federalism especially at a time when the Centre was trying to build a consensus among the States on GST. The CM said non-implementation of GST from April 1, 2010 should not be taken as a ground to stop the CST compensation and the Centre had to provide compensation till GST was introduced as the revenue loss suffered by the States was substantial and permanent. Revision of VAT rate from four per cent to five per cent should not be linked to the CST compensation for 2010-11 as it was not part of the original compensation package and the VAT revision had nothing to do with the CST, she said.
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