Slamming the Centre over failure to pay the Goods and Services Tax (GST) dues to the states, West Bengal chief minister Mamata Banerjee today shot off a letter to Prime Minister Narendra Modi alleging that it undermines federalism and urged him not to destroy the trust between the states and the Centre on the issue.

“Depriving states of GST Compensation is an attempt to undermine federalism,” Miss Banerjee wrote and asked the PM “not to allow an insufferable blow to the federalist polity of the nation by depriving the states of the GST compensation”.

Miss Banerjee said that if it is said that it is not the responsibility of the Government of India to compensate states for GST shortfall in this pandemic then “this appears to be an act of subterfuge to undermine the trust reposed by the states in the spirit of cooperative federalism” and “an onslaught on the democratic and federal structure of the country”.

“I am deeply anguished by the Goods and Services Tax (GST) imbroglio which tantamounts to a betrayal of the trust and moral responsibility of the Government of India towards the states, violating the very premise of federalism.

“This is a travesty and an abrogation of the fundamental basis on which the states gave up 70 per cent of their taxing powers, including the entire VAT regime, to usher in the GST regime,” Miss Banerjee wrote.

Miss Banerjee reminded Mr Modi that he as CM of Gujarat had opposed the implementation of GST on various grounds while former finance minister Arun Jaitley had stated that the sole reason why BJP was opposing GST implementation was because it did not trust the Government of India in honouring compensation of GST losses to the states. “Today his words are ringing in our ears as we are losing trust on the BJP Government in the Centre, in honouring its solemn promise of fully compensating GST losses to the states,” she wrote.

She added that the “agreed formula” for giving up taxing powers was the promise of full compensation of shortfall in GST collection for five years.

Later in a Press Conference in Nabanna, Miss Banerjee said that she has spoken on behalf of all the chief ministers. “During the ongoing pandemic situation there is only burning and no earning. Why is the Centre moving back from its commitment? This is nothing but a breach of trust on the Centre’s part,” she said.

The non-BJP ruled states and Union Territory Puducherry on Monday had rejected the Centre’s suggestion that the states should borrow to make up for the GST shortfall, saying the constitutional liability to fill the gap lies with the Union government.