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The Centre and the States are unlikely to review the structure of the Goods and Services Tax Network, whose ownership pattern, with a majority private stake, is causing disquiet in some circles, given that the company, which is building the IT infrastructure for the GST, will have access to sensitive tax data.
“There is no plan to change the GSTN structure,” said a senior official. “The company was set up after three years of deliberations and was duly approved by the Empowered Committee of State Finance Ministers and the Union Cabinet.”
The official further noted that GSTN was set up based on the recommendations of the Technology Advisory Group for Unique Projects and an empowered group for IT infrastructure for GST that was set up under the Empowered Committee.
The government’s current priority, say officials, is to ensure smooth implementation of the goods and services tax from the next fiscal.
GSTN Chairman Navin Kumar declined to comment on the issue, but told BusinessLine , “GSTN is a not-for-profit, non-government private limited company.”
Strategic control with govt GSTN’s ownership structure — LIC Housing Finance has 11 per cent equity in it, while ICICI Bank, HDFC, HDFC Bank and NSE Strategic Investment Corporation have 10 per cent stake each — has come under a cloud in recent times.
Sources, however, noted that though the Centre and the States, with 24.5 per cent stake each, have a collective minority stake of 49 per cent in GSTN, the Board is structured in such a way that the government will always have strategic control.
Of the 14 directors on the GSTN Board, seven are government nominees: three directors are nominated by the Central government, three more are nominated by the States, and the Chairman is selected jointly by the Centre and the States.
Of the remaining seven, private shareholders can nominate three directors; three others are independent directors.The 14th director is the CEO, who emerges from an open selection process. “Private companies may have a 51 per cent stake in GSTN, but they cannot dictate terms. No Board decisions can be taken against the interest of the government,” said the source, adding that the rules also mandate that the quorum for a Board meeting requires that at least half of the government-nominated directors should be present.
Another official pointed out that most large government IT projects have been given to private software firms, and GSTN was no exception, in that sense.
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