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RBI asked to return 1,274 cr to TS govt
RBI asked to return 1,274 cr to TS govt. The Finance Ministry on Monday responded to the plea by the Telangana State government for release of Rs.1,274.21 crore from the Reserve Bank of India (RBI) towards deductions made earlier by the bank in response to the Income Tax notice.
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Centre backs TS claim
RBI stopped the Central government fund at the request of Income Tax Department for recovery of arrears owed by the AP Beverages Corporation when the State was untied
New Delhi: The Finance Ministry on Monday responded to the plea by the Telangana State government for release of Rs.1,274.21 crore from the Reserve Bank of India (RBI) towards deductions made earlier by the bank in response to the Income Tax notice.
This followed the appeal made to the Ministry by the Union Urban Development Minister, M Venkaiah Naidu, on Sunday to this effect. It may be recalled that the RBI had attached the Central fund following the request by the Income Tax Department towards recovering tax arrears owed by the AP Beverages Corporation when the State was united.
A letter was issued by the Joint Secretary, Rajat Bhargava, to Deputy Governor of the RBI on Monday in this regard. The letter stated that "after careful examination and consideration of issues connected, it has been decided that the deductions made by the Reserve Bank of India of an amount of Rs. 1274.21 crore on account of State of Telangana in response to the Income Tax notice, are not in consonance with the principle of co-operative federalism and RBI has been asked to reverse the entry."
"Since, the money in the principal account of Telangana held by the RBI, formed part of the Consolidated Fund of Telangana, Article 204 (3) of the Constitution of India mandates that the consolidated fund of a State can be debited only after the due process of appropriation. Any decision to debit the cash balance of any State by RBI should be based on some executive order issued by the competent authority after following the legislative process of appropriation."
"The deduction by the RBI of Rs 1274.21 crore from the principal account of the State of Telangana held by the RBI towards income tax liability of Andhra Pradesh Beverages Corporation Limited was considered by the Ministry of Finance and the RBI was advised to reverse the same without any prejudice to the rights of Income Tax. Further, RBI may keep a note that money from the Consolidated Fund of any State shall be transferred/withdrawn only after following the constitutional and legal requirements".
