The GST Council on Friday approved making the GST-Network (GSTN) a Government-owned entity by allowing the regime to take over the stake held by private entities. Post the deal, the central and State Government will own 50 per cent each of the new GSTN.
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.
Finance Minister Arun 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.
“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.
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, the Finance Minister said he had proposed to the panel for a change in the structure of GSTN which was accepted. However, 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 GSTN, a 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.