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 Bill – Aug 8, 2016, DD channel on YouTube

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

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

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

[7] The GSTN Saga – The pain of doing business in India – Sep 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 company – Apr 10, 2018, LiveMint.com