PREAMBLE
The Goods and Services Tax [“GST”] Act, 2017 (12 of 2017) defines “common portal” in section 2(26). It defines the “common portal” as the common Goods and Services Tax electronic portal referred to in section 146.
Section 146 of the GST Act, 2017 provides details about the Common Portal. It provides that “The Government may, on the recommendations of the Council, notify the Common Goods and Services Tax Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation, and settlement of integrated tax, electronic way bill and for carrying out such other functions and for such purpose as may be prescribed”.
Notification No.4/2017 Central tax dated 19-6-2017, in the exercise of the power conferred by Section 146 of the GST Act, read with Section 20 of the Integrated Goods and Services Tax Act, 2017 (‘‘IGST Act”) notifies www.gst.gov.inas Common GST Electronic Portal for facilitating registration, payment of tax, furnishing of returns, computation and settlement of integrated tax, electronic way bill. The notification has come into force on the 22nd day of July 2017.
The Explanation to this notification explains that for this notification, “www.gst.gov.in” means the website managed by The Goods and Services Tax Network [“GSTN”], a company incorporated under the provision of section 8 of The Companies Act, 2013,(18 of 2013).
The Goods and Services Tax Network-GSTN
GSTN is a government enterprise incorporated on 28 March 2013. GSTN was registered as a non-government, not-for-profit, private limited company under section 25 of the Companies Act 1956 with the following equity structure-
|
Central Government |
24.5% |
|
State Governments & EC |
24.5% |
|
HDFC |
10% |
|
HDFC Bank |
10% |
|
ICICI Bank |
10% |
|
NSE Strategic Investment Co |
10% |
|
LIC Housing Finance Ltd |
11% |
As per the decision of the GST Council, the shares held by non-government Financial Institutions are being transferred to Central and State Governments so that both hold 50% shares each of GSTN and it becomes a 100% government-owned company. Under approval granted by the Registrar of Companies (ROC), Ministry of Corporate Affairs (MCA), Government of India the status of GSTN has been changed to Government Company in terms of Section 2(45) of the Companies Act, 2013. The Board of GSTN in its 49th Meeting held on 30th June 2022, has approved the conversion of GSTN into a Government Company and hence 100% of the shareholding is being held by the Government in GSTN.
Pursuant to the conversion of GSTN into a 100% Government company; the shareholding structure of GSTN is as under:
|
Name of Shareholder |
Nos. of shares |
% of Shareholding |
|
Government of India |
50,00,000 |
50% |
|
States |
50,00,000 |
50% |
|
Total |
1,00,00,000 |
100% |
GSTN has built Indirect Taxation platform for GST to help taxpayers in India to prepare, file returns, make payments of indirect tax liabilities and do other compliances. It provides IT infrastructure and services to the Central and State Governments, taxpayers and other stakeholders for implementation of the GST in India.
The GST System Project is a unique and complex IT initiative as it established for the first time a uniform interface for the taxpayer under indirect taxes through a common and shared IT infrastructure between the Centre and States. The Centre and State indirect tax administrations which used to work under different laws, regulations, procedures and formats and consequently the IT systems worked as independent sites, were integrated into one system with uniform formats and interfaces for taxpayers and other external stakeholders. GSTN provides a strong IT Infrastructure and Service back bone which enables capture, processing and exchange of information amongst the stakeholders including taxpayers, States and Central Governments, Accounting Offices, Banks and RBI.
The website of GSTN www.gstn.org.in provides more details about Goods and Services Tax Network.
PREVENTION OF MONEY LAUNDERING ACT, 2002
The Ministry of Finance vide Notification No. G.S.R. 381(E), Dated 27.06.2006, had specified a list of agencies that were required to share information with the Enforcement Directorate (ED), the Financial Intelligence Unit (FIU) and other investigative agencies under the Prevention of Money laundering Act, 2002 (PMLA).
Now, the Central Government has expanded the scope of PMLA by including the GSTN in the list of agencies. GSTN is an information technology system responsible for managing the GST portal. These changes have been made with respect to section 66 of PMLA, which mandates the disclosure of information by the person as specified by the director or any other specified authority.
Section 66 of PMLA reads under-
66. Disclosure of information.—The Director or any other authority specified by him by a general or special order in this behalf may furnish or cause to be furnished to—
- any officer, authority or body performing any functions under any law relating to imposition of any tax, duty or cess or to dealings in foreign exchange, or prevention of illicit traffic in the narcotic drugs and psychotropic substances under the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985); or
- such other officer, authority or body performing functions under any other law as the Central Government may, if in its opinion it is necessary to do so in the public interest, specify, by notification in the Official Gazette, in this behalf, any information received or obtained by such Director or any other authority, specified by him in the performance of their functions under this Act, as may, in the opinion of the Director or the other authority, so specified by him, be necessary for the purpose of the officer, authority or body specified in clause (i) or clause (ii) to perform his or its functions under that law.
Prior to this inclusion, there were already 25 agencies, including the Competition Commission of India, Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Insurance Regulatory and Development Authority of India (IRDA), Serious Fraud Investigation Office (SFIO), and Director General of Foreign Trade (DGFT). The inclusion of GSTN has been made as the 26th entry in the list of agencies.
At present, Section 158 of the GST Act gives the power to disclose the information it has with regard to any prosecution under the Indian Penal Code and even under any other law in force for the time being. However, there was no corresponding power under PMLA to disclose information to the GSTN unless notified under Section 66(1)(ii) of PMLA. With the current notification, GSTN has now been included in the list.
The inclusion of GSTN in the list facilitates the effective sharing of sensitive data, aiding the Enforcement Directorate (ED) in investigating and recovering evaded revenue through money laundering. This decision is expected to have a significant impact on enhancing the effectiveness of prosecutions and investigations in the cases of GST related violations.
The notification will now facilitate the sharing of information or material in possession between the ED and GSTN, if ED, has reasons to believe that the GST provisions have been contravened.
REPERCUSSIONS OF BRINGING GSTN UNDER THE PMLA
Inclusion of GSTN in the notification issued under section 66(1)(ii) of PMLA does not mean that the offences under GSTAct are brought under PMLA.
As per Section 2(1)(y) “scheduled offence” means—
- the offences specified under Part A of the Schedule; or
- the offences specified under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or
- the offences specified under Part C of the Schedule.
Part A contains 29 paragraphs.Paragraph 11 notifies offences under Section 12A read with section 24 and section 24 of the SEBI Act, 1992 (15 of 1992), Paragraph 12 notifies offences under section 135 of the Custom Act, 1962
(52 of 1962) and Paragraph 29 notifies offences under section 447 of The Companies Act, 2013 (18 of 2013).
Part B notifies offences under section 132 of The Custom Act, 1962 (52 of 1962). Part C notifies an offence which is the offence of cross border implications and is specified in,—
(1) Part A; or
(2) * * * * *
- the offences against property under Chapter XVII of the Indian Penal Code (45 of 1860).]
- The offence of willful attempt to evade any tax, penalty or interest referred to in section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (22 of 2015).
CONCLUSION
The offences relating to GST have not been notified as scheduled offences in the Schedule to Section 2(1)(y) of PMLA. So offence related to GST has not been brought under PMLA.