CST dispute to delay roll-out of GST

The roll-out of the goods and services tax (GST) regime is likely to be delayed, with several state governments issuing an ultimatum to the centre, demanding a quick resolution of central sales tax (CST) compensation issue.

An empowered committee of state finance ministers has urged prime minister Manmohan Singh to resolve the CST issue by 7 August to ensure that there are no difficulties in implementing GST.

''States are angry, they are agitated,'' Sushil Modi, chairman of the committee, and deputy chief minister of Bihar, told reporters. ''If there is a trust deficit at the beginning of GST, then how will the states rely on the central government that it will compensate them once GST is implemented,'' he asked.

Modi had earlier written to Singh – who is also handling the finance portfolio now – urging him to address the concerns of state governments. The state governments argue that the centre should give them compensation of Rs19,000 crore following the reduction in CST rates from four per cent to two per cent.

However, the centre has given them compensation of just Rs6,393 crore, they claim. They have also asked for compensation for 2011-12, but the centre has provided for a mere Rs300 crore in this year's budget.

The union finance ministry says the centre cannot continue compensating the states for their delay in accepting the GST regime.