Acting on the orders of Bombay High Court, the chief secretary of Maharashtra has called the Pune Cantonment Board (PCB) chief executive officer (CEO) for a hearing at his office on January 11 in connection with the pending Goods and Services Tax (GST) dues of over ₹459 crore.
After hearing counsel for parties in the case, the court has granted relief prayed for by the petitioners and the PCB has been given an opportunity to make representation within a period of two weeks to the chief Secretary.
Maharashtra has been directed to dispose of the representation within two months after giving an opportunity to the petitioners of being heard.
PCB is facing the worst financial crisis in its history with developmental works worth crores of rupees being hit due to fund shortage, including basic work like maintenance of gardens and ground level health department staff.
Prior to 2013, Pune Municipal Corporation (PMC) had been collecting octroi and PCB was getting its share from PMC. Subsequently, the state government abolished octroi with effect from April 1 2013 and octroi compensation to the board was stopped. As per government of Maharashtra notification in 2013, PMC started collecting Local Body Tax (LBT) instead of octroi within its jurisdiction with effect from April 2013. There is no revenue sharing agreement between PMC and PCB from April 1, 2013.
Under Section 71 of the Cantonments Act, 2006, the Ministry of Defence (MOD) authorised the board to impose LBT through a resolution dated June 4, 2015 and the board was able to generate revenue to the tune of ₹88 crore per annum. On April 12, 2017, GST was enacted by the central government and implemented with effect from July 1, 2017.
The introduction of GST has resulted in a subsummation of taxes, including octroi, LBT, entry tax, entertainment tax, which were earlier used to be collected by local bodies cum authorities and or PCB. This has led to considerable revenue loss to the Board.
PCB has been consistently taking up the matter with higher authorities, state and central governments for obtaining due share of GST. The matter has also been taken up by the principal director, Defence Estates; Southern Command, Pune; General Officer Commanding-in-Chief (GOC-in-C), Southern Command, Pune with the state government of Maharashtra for release of GST Compensation. The elected members of the board had also met the finance minister with a request for releasing the GST compensation share. But despite vigorous efforts made till date the due share of GST compensation has not been provided to the board, Pune.
Due to annual revenue loss to the tune of ₹90 crore, a self-sufficient cantonment board has become deficit. Due to non-receipt of GST compensation, the board is finding it difficult to perform the statutory duties as per the provisions of the Cantonments Act, 2006.
Meanwhile, the Directorate General of Defence Estates (DGDE), a few days ago has released a ₹19 crore non-recurring grant-in aid to the Pune, Khadki, and Dehu Road cantonment boards to help them tide off the financial crunch. Pune cantonment has been given Rs 12 crore, while Khadki and Dehu Road cantonments will receive Rs 3 crore and Rs 4 crore. PCB CEO Amit Kumar said, “The grant is yet to be credited in the board account and will help in meeting salary expenses and other spending of the board administration.
PCB seeks compensation of revenue loss
The board administration has maintained that with the introduction of GST, the tax base corresponding to LBT that PCB used to collect has subsumed under the tax base of the GST and is concurrently taxed by the Union and state governments. Since Cantonment Board has no longer access to the tax base (corresponding to LBT), under the federal structure, demand of PCB for compensation of revenue loss from the state government is justified.