Kerala and West Bengal have been citing the adverse impact of demonetisation on state finances to argue that GST’s implementation should be delayed.

Kerala along with West Bengal have been up in arms against the Centre’s demonetisation decision citing the negative fallout on the common man and on state finances. Photo: Mint

New Delhi: Demonetisation has derailed the mutual trust between the Centre and the states, Kerala finance minister Thomas Isaac tweeted earlier on Monday morning, blaming the Centre’s move for causing a delay in the implementation of the goods and services tax (GST) from 1 April 2017.

“#DeMonetisation derailed the mutual trust. Topples the #GST plans from Apr 1st,” Isaac wrote on microblogging website Twitter.

Kerala along with West Bengal have been up in arms against the Centre’s decision to declare the Rs500 and Rs1,000 currency notes illegal tender from 9 November citing the negative fallout on the common man and on state finances. Both states have argued that given the adverse impact of demonetisation on state finances, GST’s implementation should be delayed to prevent a double whammy.

In a series of tweets after the sixth meeting of the GST Council, which concluded on Sunday without finalization of the laws, Isaac said, “GST law not in winter session. Council stalemate continues.Only 100 sections of 200 sections of model law were agreed upon so far,” adding that Monday’s meeting was given up on the pretext of Eid Milad as discussions on the bills would not have concluded.

Three legislations—the central GST bill, the integrated GST bill and the bill to compensate states for revenue losses arising in a transition to GST—were to receive the council’s nod and be tabled in the ongoing session of Parliament. But so far, not even one of the bills has been completely vetted by the council.

With the delay in the passage of the bills in Parliament, the Centre is likely to miss the implementation rollout date for this ambitious tax reform. However, the implementation can only be delayed till September 2017 after which existing indirect tax laws will become null and void.

The next meeting of the council on 22 and 23 December will continue the discussions on the draft CGST and SGST laws. After this, the integrated GST laws, where the contentious issue of sharing of administrative powers will be discussed, will be taken up by the council.