Finally, after all the mess, the Government decides to take over GSTN. Will FM & Adhia admit they were wrong?

Has wisdom finally dawned on the Indian government on GSTN?

Has wisdom finally dawned on the Indian government on GSTN?
Has wisdom finally dawned on the Indian government on GSTN?

It is believed that Winston Churchill said that “Americans can always be trusted to do the right thing, once all other possibilities have been exhausted.” There has been much speculation[1] about whether Churchill did indeed say that but this was the phrase that came to mind when I read that Indian Govt. is mulling taking full control of the Goods and Services Tax Network (GSTN).

It appears as though wisdom has finally dawned. The Union Government on Tuesday started thinking of taking full control of Goods and Services Tax’s (GST) control and tax collecting mechanism GSTN.

When PGurus questioned the ownership structure of GSTN, a hue and cry were raised[2]. Finance Minister Jaitley replied in the Lok Sabha that it is best left to a private company to deal with the billions of transactions that take place on a daily basis[3]. This was an indirect jab at Government’s own departments, who had written the Income Tax Software program and other services, that they did not have the skills to come up with the software for GSTN.

Needless to say that this raised the hackles of the Indian Revenue Service (IRS) Officers Association. The association has been demanding that they be given the control of this software. BJP leader Subramanian Swamy was urging full government control, pointing out the dangers of allowing majority ownership in the hands of foreign banks[4]. But Finance Minister Arun Jaitley preferred to go ahead with the GSTN whose ownership was tweaked by his buddy, the former Finance Minister P Chidambaram, to include Private Banks[5]. Apart from Jaitley, his Finance Secretary Hasmukh Adhia also threw his weight behind GSTN[6].

It appears as though wisdom has finally dawned. The Union Government on Tuesday started thinking of taking full control of Goods and Services Tax’s (GST) control and tax collecting mechanism GSTN.

PGurus ran a series of articles[7] in which serious matters pertaining to the role and the performance of the GSTN was questioned. Hasmukh Adhia was asked many pointed questions on data security, tender issues, and expenditure from exchequer[8].

The Finance Ministry has allotted more Rs.5000 crores to GSTN to develop software through Infosys and still, the software is not working properly. The 51 percent shareholders in GSTN are ICICI Bank, HDFC, HDFC Bank, LIC Housing Finance and an NSE subsidiary… These firms have not yet put a single paisa in GSTN[9]. Due to software related issues, lakhs of crores of rupees are not still disbursed between states and huge amounts of money are deposited at shareholder private banks like the ICICI Bank and the HDFC Bank. Shouldn’t these funds be kept in Public Sector Undertaking (PSU) Banks such as the State Bank of India?

In what appears to be the first step towards a drastic restructuring and resurrection of the GSTN, the Prime Minister Narendra Modi appears to have issued directions to have this matter be looked at from ground up. The Government is considering to convert Goods and Services Tax Network (GSTN) into a government entity soon, to monitor the performance of the company more closely.

According to media reports on Tuesday, after returning from the All India Institute of Medical Sciences (AIIMS), the  Finance Minister Arun Jaitley has written to Finance Secretary Hasmukh Adhia to “examine the possibility of converting GSTN into a government company[10]“. The fact is that these two individuals were among the most vociferous supporters of GSTN being kept private. This must be a bitter pill to swallow.

The new proposal, after being finalized will have to go through the rest of GST Council, which will have to give its final nod, before the government can actually convert GSTN to a government entity. Arun Jaitley and Hasmukh Adhia were stonewalling CAG from auditing GSTN8 and they even went to extent of issuing circulars that the affairs of GSTN be exempt from General Financial Rules and also allowed payment of Rs.1400 crores to GSTN without Cabinet approval. Have a lawyer and a Doctorate in Yoga placed the administration and tax collection mechanism of GST in serious jeopardy? We at PGurus have been well-intentioned for the past two years, warning of the possible chaos that would result from the hasty decisions that the previous government had taken. Unfortunately, these pleas fell on deaf ears and now we are at a critical stage.

GSTN affairs were messed up by Jaitley and Adhia for the past four years and they should be made accountable for this. Hope the Prime Minister is listening.

References:

[1] Americans Will Always Do the Right Thing…Nov 22, 2016, The Churchill Project

[2] Why was GSTN floated by the UPA in 2013, with private ownership of 51 percent?Aug 7, 2016, PGurus.com

[3] Finance Minister Arun Jaitley addresses Lok Sabha on GST BillAug 8, 2016, DD channel on YouTube

[4] GSTN – It is the data and the Govt owns itSep 1, 2016, PGurus.com

[5] Chidambaram changed Pranab model of GSTN and rigged it for Pvt. firms. Change it – Swamy to PMOct 1, 2016, PGurus.com

[6] More muck and sleaze tumbles out from the cupboards of the Finance MinistryMar 18,  2018, PGurus.com

[7] The GSTN Saga – The pain of doing business in IndiaSep 17, 2017, PGurus.com

[8] GSTN tender scam – Will Hasmukh Adhia speak now? Why was Rs.1400 crores allotted bypassing the Union Cabinet?Mar 28, 2018, PGurus.com

[9] Did Hasmukh Adhia convert GSTN into a UPA-3 project?Mar 30, 2018, PGurus.com

[10] Govt mulling converting GSTN to govt companyApr 10, 2018, LiveMint.com

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Sree Iyer

An inventor and out-of-the-box thinker, Sree Iyer has 37 patents in the areas of Hardware, Software, Encryption and Systems.

His first book NDTV Frauds has been published and is an Amazon Bestseller.It ranked second among all eBooks that were self-published in 2017.

His second book, The Gist of GSTN which too is available on Amazon as an e-Book and as a paperback.

His third book, The Rise and Fall of AAP is also available in print version or as an e-Book on Amazon.

His fourth book, C-Company just released to rave reviews and can be bought as a print version or as an e-Book on Amazon.
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17 COMMENTS

  1. Dr.Subramaninium Swamy was right. He was first pointed out. His decisions are always right. Great. Achedin are coming

  2. I would still trust pvt enterprise over govt. nothing that any psu-s do inspire confidence. they are soaking in corruption, terrible inefficiency, not service oriented. The problem is not our private enterprise. However, our private sector companies too come under a cloud when they must deal with the corrupt government.
    I don’t see why the goi can not keep it private and ensure right checks and balances.
    There is btw no credible report out there – yes, there are a lot of opinions with no credible evidence to back them – to show:
    1. The current gstn working is not steadily improving, or that it can not be made to improve.
    2. That the goi can do a better job. What if we land in a worse situation ? Knowing the goi bureaucracy track record, the question becomes eminently relevant.

  3. The GOI’s stake in GSTN be increased from 24.50% to 51% and the States/UTs stake be retained at 24.50% and the balance sake of 24.50% be given to premier PSU Banks like SBI, PNB, BOIs and at NO point of time the private players should have a stake in GSTN, in public interest.

  4. What we all should understand is current Civil Service system is a back bone of all corruption in India. We cry foul against Politicians for corruption, while its the civil service scums who do not change irrespective of which government gets elected. Meaning, irrespective of another 100 Modis getting elected, unless we do something serious changes to civil service system to flush out all corrupt (that may constituent 95% of all IAS officers), the corruption in India will not change. The silver line for this dark cloud of civil service problem though, its fairly easy to dismiss civil service men compared to catching a corrupt politician- only requirement is a fair judiciary. So the BIG question is, is our Judiciary fair enough ? As compared to USA and Japan, which have more than 80%, India has under 20% conviction rate. How do we fix the judiciary ? What an election do is break the link off corrupt politicians-Civil Service-Judiciary only of corrupt politicians to certain extent, but elections CANNOT break the nexus between corrupt Civil Service – Judiciary. What can then?? Military Rule!!

  5. For past 4 years Pvt players controlled GSTN and used govt money and huge funds as deposit and might have illegally or unofficially looted the corporate tax data. Jailtey and Adhia might be taken t task for these frauds

  6. The Rajya Sabha of this country can have eminent and patriotic people in various walks of life to elicit meaningful views and constructive suggestions for development of this country instead of nominating politicians rejected by people.

  7. Arun Jaitely could not read the writing on the wall ? He is always seen & found playing to the hands of private lobby. He is morally corrupt. How can one still remain finance minister with such faulty judgments ? Dumping Arun Jaitely is long over due & it is good for the health of Modi & wealth of India to do it at earliest.

  8. So what ? That was the need of the hour and FM in tandem with a strategy however immoral,illegal etc worked as per the strategy agreed upon with ruling party thinktank at that time.
    Btw why would FM,adhia alone admit ,U should ask the Q to Pradhan Sevak who watches over everything happening in the country right? After all this Pradhan Sevak can claim credit for all +ve things happening like monsoon rainfall,ISRO launches,sports victories etc right? If so why dont you write this article to Q him as well?

  9. More drastic measures are needed. Appointment of lokpal, filling all judges vacancies etc. Otherwise Modi is perceived as protecting vested interests which I am sure he is not. He has to get rid of lutyen cronies immediately before it is too late.He has to get gross root workers in key positions and sack all ex bureaucrats, Jaitleys, etc, who are maintaining status quo.

  10. You guys are doing a stellar job!! May your services bear fruits to the country & continue to achieve greater strides.

  11. Dear Mr Iyer
    I feel GST filing systems is in a mess kind. Refunds for sales returns credit notes is still not implemented in GSTR 1 . Traders are in dark .
    Thanks
    CA

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