Quashing the apprehension raised by states on the interference of investigating agencies in businesses after bringing the Goods and Service Tax Network under the ambit of the Prevention of Money Laundering Act, 2002, Central Board of Indirect Taxes and Customs Chairman Vivek Johri clarified that “there is no reverse flow of information that is going to happen”.
“What we have done is to notify GSTN as one of the agencies that can receive information from Financial Intelligence Unit. The idea is to share that information with GSTN which the GSTN can then use for risk assessment,” Johri told Informist.
As per an amendment to the provisions of the Prevention of Money Laundering Act, 2002, GSTN has been included in the list of entities with which the Enforcement Directorate will share information. A notification by the government on this had led to confusion and stress in businesses, said tax experts. It was thought that GSTN would now have to share information with the Enforcement Directorate and the Financial Intelligence Unit.
On Jul 11, at the 50th GST Council meeting, some Opposition-ruled states, including Delhi, Karnataka, and Rajasthan, had raised the issue of the Centre bringing GSTN under the ambit of the Prevention of Money Laundering Act without any prior discussion in the GST Council. Delhi Finance Minister Atishi Marlena had told the media that at a time when the Centre was misusing powers of the Enforcement Directorate, businesses were wary of wrongful meddling by them.
“If the apprehension is that information about taxpayers in the GST base is going to be shared with any other law enforcement agency by virtue of this notification, neither the law provides that nor the notification. So, there is no possibility of this being used to push information in the reverse direction,” Johri said.
The move comes at a time when instances of GST fraud and fake registrations are on the rise and the indirect tax body has been going big on weeding them out.
On May 16, the CBIC had launched a special two-month drive to identify businesses issuing fake invoices and input tax credit. As on Jul 11, the department identified around 70,000 bogus GST registrations, verified over 60,000 of them and found 17,000 fake registrations under this special drive. The department has also identified GST evasion to the tune of 170 bln rupees.
On risk to businesses, Jain responded in the negative.
Experts unanimously said that the provision is not to allow undue interference by the Enforcement Directorate or other agencies, but largely for sharing of information.
The provision “will pave the way for seamless flow of information between them, which can be used for initiating necessary proceedings under the respective law”, according to Bimal Jain, chair of indirect tax committee in the PHD Chamber of Commerce and Industry.
Source from: https://www.informistmedia.com/gstn-under-money-laundering-law-to-help-assess-risk-says-cbic-head/
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