Subramanian Swamy writes to PM Modi, seeks 'stay of all operation' of GSTN

Showing no signs of let-up over GSTN, BJP MP Subramanian Swamy has written to Prime Minister Narendra Modi seeking "stay of all operations" of the IT backbone of GST till it is restructured with government-owned financial institutions.

Arguing that the department of electronics and the finance ministry are fully capable of handling GST data, he said that "in effect, GSTN (with the current shareholding) is foreign controlled" and hence, needs to be restructured in national interest. The Rajya Sabha MP said the Goods and Services Tax Network (GSTN), a special purpose vehicle, is dominated by private institutions and these entities are controlled by foreign shareholders.

"I am happy to learn from the media that you have taken a review meeting of finance ministry officials on the question of GST/GSTN implementation. As you may now be aware, GSTN, which is a data processing and tax revenue collecting private limited company, was never security cleared by the home ministry, whose clearance is mandatory," Swamy reasoned. "I strongly urge you therefore to direct the complete stay of all operations of the presently constituted GSTN, and that it remains non-operational till it is restructured according to our national interest and after security certification by the home ministry," the letter said.

GSTN was formed under the previous UPA regime to set up the information technology framework for rolling out the indirect tax regime that will replace a string of local levies. The central government holds 24.5 per cent stake in GSTN while state governments together hold another 24.5 per cent. The balance 51 per cent equity is with non-government financial institutions like HDFC Bank, HDFC Ltd, ICICI Bank, NSE Strategic Investment Corporation and LIC Housing Finance.

Swamy said ICICI and HDFC shareholding is near about 65-80 per cent owned by foreigners and "in effect GSTN is foreign controlled and hence, needs to be restructured". The Harvard-trained economist said CAG has no power to look into financial transactions of GSTN, which will run into huge amounts once GST is implemented. "Hence, there is reckless disregard to the use of public funds to benefit the private shareholders and employees," he wrote to the Prime Minister. He also questioned annual salary of Rs 1 crore and other perks to CEO of GSTN. "The Indian Revenue Service Association has unanimously resolved that GSTN is a facility which can be duplicated by the experience of the finance ministry's data processing of income tax receipts and with much greater experience and efficiency by CBEC," he said. 

Swamy further said the computer programming supposedly done by GSTN has now been outsourced to Infosys at a huge payment of Rs 600 crore, of which almost Rs 400 crore have already been paid.
Swamy added that wife of a minister was made director in Infosys "just after the contract was signed". "The data obtained by private parties and foreign shareholders of indirect tax dues and payments of Indian taxpayers as well as details of travel from the point of manufacturing to the point of sale will help private parties rig national exchange outcome," the member of Parliament said.

"I... am of the view that given the capacity of our department of electronics and finance ministry's data processing capacity that GSTN should be restructured with government-owned financial institutions in place of the present two private banks and private companies. Only then, further progress in implementation of GST can take place." He also cautioned that the present GSTN will be set aside by the Supreme Court on a PIL as unconstitutional and not being in public interest.