Did Hasmukh Adhia convert GSTN into a UPA-3 project?

Majority stakeholders put in 5 crores to control the 5000 crores GSTN investment!

Majority stakeholders put in 5 crores to control the 5000 crores GSTN investment!
Majority stakeholders put in 5 crores to control the 5000 crores GSTN investment!

The idea of Goods and Services Tax Network (GSTN), a tax network for the Goods and Service Tax (GST) was conceptualized by the former tainted Finance Minister P Chidambaram and was incorporated on March 28, 2013. How Chidambaram was aware that the next Government was going to pass GST Bill is still an intriguing question.

His predecessor Pranab Mukherjee had suggested a fully owned Government mechanism to administer and collect the tax. Chidambaram changed it into a 51% private organizations controlled company! The Government of India holds 24.5% equity in GSTN and all States of the Indian Union, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5%. Balance 51% is with HDFC (10%), HDFC Bank (10%), ICICI (10%), NSE Strategic investments (10%) and LIC Housing Finance (10%). The majority of the LIC Housing Finance is now with foreign financial firms and private firms and LIC is having only nominal shares.

The authorized capital of the company is Rs.10 crores, of which Rs.5 crores was provided (shared amongst) the majority shareholders. To start with, GSTN was funded through a one-time non-recurring Grant- in aid of Rs.315 crores from the Central Government towards expenditure for the initial set up and functioning of the Special Purpose Vehicle (SPV). Following this, the Union and State Governments of India have pumped in more than Rs 5000 crore to keep GSTN kicking. So precisely, by paying up Rs.5 crores, the majority stakeholders controlled Rs.5000 crore of the public money!

The first question is – Is it true that the Central Board of Excise and Customs (CBEC) repeatedly proposed on file to make GSTN a wholly-owned Government of India body? Is it true that Finance Secretary Hasmukh Adhia scuttled every effort by the CBEC to purge GSTN of the majority private shareholders? Is it because the Civil service Conduct Rules do not apply to the employees of a body like GSTN? Why unlike the UIDAI, the GSTN was not made a fully-owned Government body, especially because it is the repository of national tax data and also that the GSTN is linked to all banks, RBI, Customs servers and the PFMS module of the Union Accounts Department?

Secondly, why did the majority stakeholders make no contribution towards the expenditure of the GSTN? Why did Adhia approve performance-linked incentives for the senior officials of the GSTN, when he was fully aware that this was an expense from the exchequer? Who audited the performance of GSTN before they were doled out public money as incentives? If there was no audit of their performance by the Government before sanctioning such incentives, running into crores, is this not a fraud on the exchequer, in which Adhia has colluded?

If one is made to believe that the functioning of GSTN is transparent and legal, why did Adhia not sign any file as Chairman GSTN? Why did he abdicate his responsibilities and hand over the additional charge to Mr. A. B. Pandey, CEO of UIDAI within a matter of 10 days? Was there a nefarious design to keep the GSTN outside the purview of the CBI to ensure a free hand to the officers to indulge in all activities with utter contempt for the law?

There is a history to some of the private stakeholders. The National Stock Exchange (NSE) under Ravi Narayan, who was part of the GSTN Board, was mired in several controversies and BJP leader Subramanian Swamy was campaigning for his removal from the board, which, it is reliably learnt, happened after the intervention of the Prime Minister’s Office.

There are lessons for bureaucrats and ministers after every scam is analysed threadbare in public. Even after the CWG scam, wherein Suresh Kalmadi was accused of flouting tender norms to provide contracts to private entities, why is the same pattern being repeated here  in GSTN? Why did Hasmukh Adhia decide to look the other way while this was unfolding or did he deliberately participate in this?

Why did Adhia, who was the epicentre of GST and GSTN, discard the advice of the CBEC to make GSTN a wholly owned Government body? Why are those files of the CBEC which proposed for takeover of the GSTN being suppressed in the Finance Ministry now? It is an open secret that the only officer who has been with Adhia all throughout this GSTN journey is – Uday Singh Kumawat!! Kumawat dutifully continued the legacy of Chidambaram in the Finance Ministry and shaped the GSTN project accordingly, while Adhia played along. Why, Mr Hasmukh Adhia?

Why was the PMO kept in the dark on these proposals pertaining to the take-over of the GSTN to make it a fully owned Government body?

A North Block veteran told PGurus – from the conceptualization to the award of contract to Infosys (which reeks of a scam), actual user charges allocation (which is a fraud on the cabinet) to the flouting of the General Financial Rules (an illegality), Adhia handled the entire project the way Chidambaram would have done it.

Will Hasmukh Adhia reply to these very important and pointed questions?

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Team PGurus


  1. Just GST? How about Aadhar? Or, making a law to send Neta-Babus aborad for medical treatemnt, with family and friends, at my expense? Jaitley is only the second stooge of the UPA. Modi is the first among UPA stooges.

  2. anything can happen in this country.. there is no accountability.. why govt needed private investment thats also of rs. 5 crore.. this article opens of many questions.. god only knows where the answer will come from..

  3. You didn’t need a crystal ball to figure out that GST bill was going to pass, or, for that matter, FDI in multibrand retail was going to happen. Whatever the US wishes. If US wants a civil strife, that will happen, too.

    Only a severe global recession can loosen the US stranglehold on Indian minds and polity.

  4. Wonder how Chidambaram formed GSTN in 2013 for the GST which passed in 2017? How he know next Government is going to pass and implement GST? Tax collection is always a Govt activity and PM should order for making GSTN a fully Govt owned body.


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