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Some opposition-ruled states on Tuesday raised concerns over inclusion of Goods and Services Tax Network (GSTN) under the purview of the Prevention of Money-laundering Act (PMLA) without any formal discussion in the GST Council. The Council held its 50th meeting on Tuesday.
“…apart from Delhi and Punjab, states like Tamil Nadu, West Bengal, Himachal Pradesh, Karnataka, Chhattisgarh, Rajasthan, Telangana have raised this issue. We said that such a big step should not have been taken without any discussion at the GST Council….many businesses and service providers will get impacted by this…with the inclusion, information about all GST taxpayers will get shared with ED (Enforcement Directorate),” Delhi’s Finance minister Atishi said.
At a time when the Centre is misusing powers of the ED, businesses are concerned about greater scrutiny by investigative agencies, she said. For the growth of the economy, we have to ensure businesses function smoothly, Atishi added.
After the Council meeting, Finance Minister Nirmala Sitharaman said the issue was raised by Delhi and Punjab finance ministers. “They both insisted on having a discussion today (Tuesday)…I had clearly told them that they will be allowed to talk and discuss it. Later, many of the ministers themselves joined to say that let’s finish the agenda first which is listed and after which we can have a discussion. After the agenda was completed, we had a discussion on the issue. When this issue was raised, the Revenue Secretary explained what exactly it is.”
Revenue Secretary Sanjay Malhotra said the notification was issued because it is one of the requirements under the Financial Action Task Force (FATF), for which the mutual evaluation process is already underway for India.
“It was also clarified that this notification will empower our tax authorities with more information. The GSTN is the recipient of information. There were doubts that GSTN will start sharing information about private businesses to other law enforcement agencies, like ED…it was clarified that Director FIU will provide information to empower authorities wherever they feel there is any chance of tax evasion or money laundering. This information can be used by tax authorities. This was clarified to them and I think all of them (state ministers) were quite satisfied with the explanation,” he said.
The government on July 7 through a notification has brought GSTN under the ambit of PMLA that will facilitate sharing of information between the GSTN, Financial Intelligence Unit, Enforcement Directorate and other investigative agencies.
The changes have been made for provisions under Section 66 of the PMLA, which provides for disclosure of information. In November last year, the government had added 15 agencies to this list including Competition Commission of India, National Investigation Agency, Serious Fraud Investigation Office, State Police, Director General of Foreign Trade, Ministry of External Affairs, National Intelligence Grid, Central Vigilance Commission among others for sharing of information between these agencies and the Enforcement Directorate.
