Modi’s government took corrective measures to fully acquire the Goods and Services Tax’s administration firm Goods and Services Tax Network (GSTN) by avoiding all the private players inducted by the former tainted Finance Minister P Chidambaram. Friday’s GST Council meet has officially declared that 51 percent shareholding by private bankers and dubious stock brokers consortium would be avoided from the strategic tax collection firm GSTN and it is made as a 50:50 partnership between the Centre and the State Governments.
Since 2015, BJP leader Subramanian Swamy was demanding the full ownership of the Government in the GSTN and kicking out the private players that Chidambaram had inducted, in 2013. In a speech in the Rajya Sabha, he had quoted the Parliamentary Committee on GST which had expressed its concerns on the holding of GSTN by Private entities. He had written a series of letters to Prime Minister Narendra Modi against entertaining private players in GSTN by Finance Minister Arun Jaitley and Finance Secretary Hasmukh Adhia.
PGurus have written a series of articles on this regard pointing out the need for full government control in GSTN. Even the IRS Officers Association was up in arms on the private control in GSTN, where Governments have only 49 percent shares.
On Swamy’s complaints, Prime Minister had ordered Intelligence Bureau probe on how private banks and firms were allowed in GSTN and found that there was no security clearance received from Union Home Ministry. GSTN was floated by Chidambaram in March 2013 with 51 percent private banks. It is still a wonder, how Chidambaram dubiously floated a private firm in 2013 when GST Acts were passed only in 2016.
“Presently, the Central Government and State Government are holding 24.5% equity shares respectively and the remaining 51% are held by non-Governmental institutions and through various mechanisms, GSTN is under strategic control of government. Majority of the GST processes including registration, the filing of returns, payment of taxes, processing of refunds is IT driven and GSTN is handling large-scale invoice level data of lakhs of business entities including data relating to exports and imports. Considering the nature of ‘state’ function performed by GSTN, Council felt that GSTN be converted into be a fully owned government Company.
*In view of the above, GST Council in its meeting held today decided:*
Acquisition of entire 51% of equity held by the Non-Governmental Institutions in GSTN amounting to Rs. 5.1 crore, equally by the Centre and the States governments and allow GSTN Board to initiate the process for acquisition of equity held by the private Companies; and
GSTN Board shall be allowed to continue the existing staff at existing terms and conditions for a period up to five years, and shall have the flexibility of hiring people through a contract on the terms and conditions similar to those used by GSTN till now while hiring regular employees. The existing financial commitments given by Centre and States to GSTN to share the capital and O&M cost of the IT Systems shall continue,” said the press statement issued by Finance Ministry after the May 4th GST Council Meet.
Buoyed by the GST Council’s decision Swamy demanded that Finance Secretary Hasmukh Adhia must be transferred out of Finance Ministry.
I demand the Finance Secretary Adhia be transferred to another Ministry like Textiles for his role in GSTN scam.
— Subramanian Swamy (@Swamy39) May 4, 2018
Finance Ministry has made several controversial moves by allowing Infosys to undertake the software and networking of GSTN. Though more than Rs.5000 crores was pumped to Infosys from GSTN, the software and networking are still in a state of chaos. Jaitley and Adhia even made secret notes to disallow the Comptroller and Auditor General (CAG) from auditing GSTN and even made an order that GSTN would not come under General Financial Rules (GFR). This was a dubious move to avoid Union Cabinet clearances to pump money into GSTN and give to private vendors like Infosys.
Now, after Prime Minister Narendra Modi’s intervention, GSTN has become a full government entity and Government should take back all tax collection money deposited in private banks like the ICICI and HDFC and deposit it in a Public Sector Bank.
Prime Minister should look to flush out the crooked people in Finance Ministry responsible for much of this chaos for the past four years.
We encourage you to read the reference links to various PGurus articles below. These articles expose the hidden private ownership in GSTN and the dubious role of Finance Secretary Hasmukh Adhia.
 Why was GSTN floated by UPA in 2013, with private ownership of 51 percent? Aug 7, 2016, PGurus.com
 Did Hasmukh Adhia convert GSTN into a UPA-3 project? Mar 30, 2018, PGurus.com
 GSTN: The pain of doing business in India – Part 3 – Nov 8, 2017, PGurus.com
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