Does GST Network require security clearance, MHA asks R&AW, IB

An e-mail query sent to GSTN, non-government private limited company formed under Section 8 of the Companies Act, remained unanswered. As per the GSTN website, the authorised capital of the company is Rs 10 crore.

MHA officials also argued that since GSTN is controlled by Indian companies, they may not need a clearance from the Home Ministry. However, a scrutiny is required on the role of FIIs which control up to 75 per cent of some of the entities that are part of GSTN.

The enquiry was launched following BJP MP Subramanian Swamy’s letter to Prime Minister Narendra Modi, questioning the Rs 300-crore grant being given by the Finance Ministry to privately-held GSTN. He also argued that the Central Board of Excise and Customs can perform the same work at a much less expense. It may be recalled that the GSTN SPV was set up in 2012 by the Congress-led UPA government.

The provision required that no single institution would hold more than 10 per cent equity, with the possibility of one private institution holding a maximum of 21 per cent equity. As per GSTN, HDFC Home Loans, HDFC Bank, ICICI Bank, NSE Strategic Investment Co each own 10 per cent stake, while LIC Housing Finance Ltd controls 11 per cent. GSTN was also required to help Centre and state tax administration prior to implementation of GST, added officials.

Home Ministry grants security clearances in cases where foreign investments, individuals or companies are involved and has categorised certain ‘countries of concerns’ which include China and Pakistan. The process of giving clearance was simplified by MHA in 2015 where 15 parameters were laid down and inputs from security agencies are now sought and processed within 4-6 weeks.