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GSTN to be converted to govt entity

New Delhi: The GST Council today approved converting the firm providing IT backbone to the Goods and Services Tax (GST) into a government owned entity from being a private company.

BJP MP Subramanian Swamy who demanded transfer of Revenue Secretary Hashmukh Adhia to a lesser important ministry for his alleged role in the “GSTN scam”.

BJP MP Subramanian Swamy, who had for months questioned the private equity structure of GST-Network (GSTN), demanded transfer of Finance Secretary Hashmukh Adhia to a lesser important ministry for his alleged role in the “GSTN scam”.

After the GST Council meeting, Finance Minister Arun Jaitley, who had for months defended the equity structure of GSTN, said he had proposed to the panel for a change in the structure of GSTN which was accepted.

He said the central government currently holds 24.5 per cent stake in GSTN and state governments collectively hold an equivalent stake. The remaining 51 per cent is held by five financial institutions.

Jaitley said the Council was agreed that the 51 per cent equity held by private entities should be taken over by the government and “eventually the central government will hold 50 per cent and state governments (together) will hold 50 per cent”.

He said the collective share of state governments will be pro rata, divided among states in accordance with their GST ratios.

“While doing so the council also recommended that the GSTN will continue to employ people contractually and have the flexibility to get the best talent from the market considering the wide range of activities and the responsibilities of GSTN itself,” Jaitley said.

Swamy, who had repeatedly questioned the shareholding pattern in the GSTN, terming it “a shady organisation” that was a “grave security” issue, tweeted soon after the decision was announced : “I demand the Finance Secretary Adhia be transferred to another Ministry like Textiles for his role in GSTN scam.”

Jaitley had previously said that he did not find anything wrong in government holding 49 per cent stake in GSTN. “The present structure of GSTN was decided by the United Progressive Alliance (UPA) when P Chidambaram was the finance minister. I have personally reviewed the entire structure and I saw no reason to disagree with him,” he had said in June last year.

The Goods and Services Tax Network – Special Purpose Vehicle (GSTN-SPV) was created as a private limited, not-for-profit company under Section 25 of the Companies Act, 1956 (Section 8 of the Companies Act, 2013) on March 28, 2013 with an objective to provide shared IT infrastructure and services to Centre and States Governments, tax payers and other stakeholders for implementation of GST in the country.

“Majority of the GST processes including registration, 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,” an official statement issued after the meeting said.

The Council, it said, decided that the entire 51 per cent of equity held by the non-governmental institutions in GSTN amounting to Rs 5.1 crore would be acquired equally by the Centre and the States governments.

However, GSTN board shall be allowed to continue the existing staff at existing terms and conditions for the a period up to five years, and shall have the flexibility of hiring people through 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,” it said.

The GSTN currently is 24.5 per cent owned by the central government and a similar percentage is held by state governments collectively. The remaining 51 per cent is with five private financial institutions — HDFC Ltd, HDFC Bank Ltd, ICICI Bank Ltd, NSE Strategic Investment Co and LIC Housing Finance Ltd.



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