No diversion of GST cess funds, says Finance Ministry

The Finance Ministry on Saturday asserted there was no ‘diversion’ from the GST compensation cess fund during FY18-FY19 as reported by sections of the media, adding, “even the Comptroller and Auditor General (CAG) hasn’t said so”.

According to a ministry source, there was only temporary retention of the excess cess in the Consolidated Fund of India under Article 266 of the Constitution, pending reconciliation, which usually happens by the end of June in the subsequent financial year.

Finance Ministry:

The source pointed out that, “the amount collected under compensation cess fund have been regularly and fully distributed to states as per their dues and budgetary provisions and by the end of July 2020 everything has been accounted for and released”.

The CAG in its audit report placed in Parliament recently highlighted ‘short-crediting’ of cess collections totalling Rs 47,272 crore to the GST Compensation Fund during FY18-FY19. Also, said this was in violation of the GST Compensation Cess Act, 2017.

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