Finance Ministry admits goof-ups in the formation of GSTN

Was the MoF goof up to not take MHA clearance for GSTN deliberate?

Was the MoF
Was the MoF "inept" or "persuaded" to not take MHA clearance for GSTN?
Goof-ups in Finance Ministry on the formation and structure of GSTN, the private companies dominated network to administer GST. Now Finance Ministry admits that there was no security clearance sought during the formation period during UPA regime (see 1 h) in the attachment) and seeks Home Ministry’s advice.

ICICI Bank and HDFC and HDFC Bank and LIC Housing Finance have several foreign investors and MHA’s clearance was needed and it was avoided.

The latest Office Memorandum of Finance Ministry shows that the company structure and formation was done by then Finance Minister P Chidambaram’s period in 2013. This structuring was an “amazing foresight” on part of the then Finance Minister P Chidambaram who showed great anticipation that the NDA Government under Narendra Modi would pass the GST Bill in 2016 and went ahead with formation of a company whose majority holdings were private.

The Office Memorandum was prepared under the series of complaints by BJP leader Subramanian Swamy for quashing the private companies from the GSTN, which is entrusted to collect taxes and administration of tax data. The Office Memorandum published at the end of this article shows the machinations that went behind in the formation of GSTN by limiting Centre and State Government’s shares up to 49 percent and allowing private banks and NSE Brokers’ consortium 51 percent. ICICI Bank and HDFC and HDFC Bank and LIC Housing Finance have several foreign investors and MHA’s clearance was needed and it was avoided.

Till date, more than Rs.3000 crores ($449 million) has been spent by the minority shareholder Central Government and major share holding private institutions have spent nothing. Since all the money given is taxpayers’, the nation as a whole has a right to know what exactly GSTN is up to. For instance, several safeguards must be taken to ensure that all data physically resides in India and a secure interface is created only for approved vendors. Despite several posts on this, GSTN has not come out with a design document on how it is going to allow third party vendors to access the data. This link in GSTN is fluff and lacks substance.

This begs the question, does GSTN know what it is doing? And why is Finance Ministry supporting this?

Tax collection and Tax administration is totally a government activity and the GSTN should be 100 percent owned by Centre and State Governments and this network ideally should be a unit under DG(Information Technology) of Central Board of Excise and Customs (CBEC).

This begs the question, does GSTN know what it is doing? And why is Finance Ministry supporting this?

Copy of Ministry of Finance Office Memorandum to the Ministry of Home Affairs

Gstn Mof Om Dec 2, 2016 by PGurus on Scribd



Note:
1. The conversion rate used in this article is 1 USD = 66.83 Rupees.
2. Text in Blue points to additional data on the topic.

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3 COMMENTS

  1. Kudos and Dr. Swamy, PGurus and others who have been raising the GSTN related privacy and conflict of interest issues steadfastly. This needs to be resolved ASAP.

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