GST Council meet: Centre ignores concerns over ED sharing info with GSTN

New Delhi: Revenue Secretary Sanjay Malhotra on Tuesday allayed concerns of several opposition ruled states on the changes made in the money laundering law stating that the amendments were required to meet the obligations of the Financial Action Task Force (FATF).

The FATF is an inter-governmental body which sets standards and develops and promotes policies to combat money laundering and terrorist financing. India became its member in 2010.

Responding to the concerns raised by opposition ruled states like Delhi and Punjab at the GST Council meeting, Malhotra said it was clarified that the changes will empower tax authorities with more information and "I think all of them (state ministers) were quite satisfied with the explanation".

The finance ministry, through a notification, brought in an amendment to the provisions of Prevention of Money Laundering Act (PMLA), 2002, as per which GSTN, which handles the technology backbone of Goods and Services Tax, has been included in the list of entities with which ED (Enforcement Directorate) will share information.

"This notification was issued because it is one of the requirement under FATF evaluation...The GSTN is a recipient of information. There were doubts that GSTN will start sharing information about private businesses to other law enforcement agencies, like ED," he said.

It was clarified that Director FIU (Financial Intelligence Unit) will provide information to authorities wherever they feel there is any chance of tax evasion or money laundering, he told reporters after the GST Council meeting here.

"This information can be used by tax authorities. This was clarified to them," the secretary said.

Several opposition-ruled states expressed concern over the Centre's decision to allow ED to share information with GST Network (GSTN), with finance minister of AAP-ruled Punjab Harpal Singh Cheema on Tuesday saying it amounts to 'tax terrorism' and scaring small businesses.

Aam Aadmi Party-ruled Delhi and Punjab voiced concerns over the notification and demanded a discussion.

"A lot of finance ministers raised the issue... Delhi, Punjab, West Bengal, Tamil Nadu, Himachal Pradesh, Karnataka, Chhattisgarh, Telangana, and Rajasthan have voiced their concern and said that it should be discussed in GST Council," Delhi Finance Minister Atishi told reporters here earlier in the day.

"We have all seen how ED is being misused to harass and arrest people. Now crores of GST-registered businesses and traders will have to save themselves from PMLA prosecution. We are against this notification," Atishi said, adding, if anyone is involved in GST evasion, then he/she should be tied under the GST laws.

The Punjab finance minister has also stated that the notification would give power to ED to catch any businessman if he/she does not pay GST and "with such decision, tax terrorism will increase in the country and it is dangerous for small businesses and the common man." According to Kerala finance minister K N Balagopal, it has been said that the amendment will be for only receiving details from ED.

"GST Council is a constitutional authority. In that meeting, it has been told that this is not for giving our (GSTN) details and only for receiving the details from ED.

"It is not a question of assurance. The authority of the GSTN is the GST Council and if it is decided like that, then it is binding," Balagopal said.