Jaya flays arbitrary action to reduce states CST slice

The decision to stop CST compensation for 2011-12 is equally objectionable,Jayalalithaa said.

Joining her West Bengal counterpart Mamata Banerjee,Tamil Nadu Chief Minister J Jayalalithaa on Saturday attacked the Centre for its arbitrary action in reducing Central Sales Tax (CST) compensation to states by linking it with VAT rate revision.

Though the Centre had agreed to compensate states for the revenue loss for 2010-11 also,the eligible compensation was arbitrarily restricted by deducting additional revenue realised through revision of VAT rate from four to five per cent,she said in a letter to Prime Minister Manmohan Singh.

I would like to point out that the action of the Government of India in linking CST compensation with the additional revenue on account of VAT rate revision is unilateral,arbitrary and untenable. There is no link between CST rate reduction and VAT rate enhancement. It was never a part of the guidelines for CST compensation, she said.

Story continues below this ad

Banerjee had shot off a letter to Singh on Wednesday protesting the Centres unilateral decision not to pay CST compensation to states for 2011-12.

The decision to stop CST compensation for 2011-12 is equally objectionable,Jayalalithaa said.