Bharatiya Janata Party leader Subramanian Swamy has urged Prime Minister Narendra Modi to “subject GSTN to a close second look and thorough scrutiny.” The Rajya Sabha MP also alleged that GSTN or Goods and Services Tax Network “has appropriated nearly Rs 4,000 crore.”
GSTN is a Section 25 (not for profit), non-government, private limited company. It was incorporated on March 28, 2013. The government of India holds 24.5 per cent equity in GSTN and all states, including NCT of Delhi and Puducherry, and the Empowered Committee of State Finance Ministers (EC), together hold another 24.5 per cent. The balance 51 per cent equity is with non-government financial institutions. The company has been set up primarily to provide IT infrastructure and services to the Central and state governments, taxpayers, and other stakeholders for the implementation of the goods and services tax (GST).
Swamy, a prominent economist and former Harvard professor, said in a letter to the Prime Minister on August 8, “It was a swift and secret move in 2013 to float this company with 51 percent private shares… Being a Section 25 company, GSTN is a not-for-profit organization. Then why should private profit making entities have any stake, and that too majority stake in it? What is in it for them?”
A close look at the private partners reveals that entities such as the HDFC Bank, lClCl Bank, and LIC Housing Finance Limited have shareholding of several foreign investment companies, Swamy said, adding that in LIC Housing Finance Limited Abu Dhabi Investment Authority and Bank of Muscat are the major private shareholders.
Tax administration is a matter that deals with sensitive private information, he said. “Being such a large shareholder, this automatically means that HDFC and lClCl will be the bankers of public money collected through taxes. Thus a large amount of money will pass through these banks!”
The Home Ministry has not even been consulted much less has approved GSTN operators security clearance to allow them access to tax data, Swamy said. In fact, that it was never placed before the Home Ministry for security clearance is shocking.
Pointing out that the GST Bill at present has a long way to go, Swamy said that there is still time to put the right government-owned structure in place. He also alleged that GSTN has appropriated nearly Rs 4,000 crore in expenses and fees for its preliminary exercises.
Swamy had written earlier also, August 5, to Modi apprising him of the inappropriateness of a private company having “easy access to private confidential tax information.”