The inquiry into the probable case of service tax evasion by Goods and Services Tax Network (GSTN) — which is creating the IT backbone for the new indirect tax regime — is still on, Central Bureau of Excise and Customs (CBEC) Chairman Najeeb Shah said.
“It’s an inquiry which is going on. GSTN is giving services and is receiving payments, so it has to pay service tax,” Shah told IANS in an interview.
Dispelling doubts whether GSTN was liable to pay service tax or not since it receives grants-in-aid from the government towards creation of capital assets for infrastructure requirements and its functioning, Shah said that the company has been paying service tax, but whether there has been an evasion or not still needs to be determined.
“There was some inquiry to be made, a very routine inquiry,” he added.
“Any service rendered for a consideration will become liable for payment of service tax unless you are exempted by government. And GSTN is not exempted,” he said.
An assessing officer of the CBEC had recently issued summons against the CEO of GSTN, asking him to appear in person or through a representative and produce balance sheets, bank statements and income-tax return forms of the company.
“A case against Goods and Service Tax Network, under the Chapter V of the Finance Act, 1994 (service tax), is being investigated,” the summons had said.
The summons had also asked the company to produce details of receipts of funds from the Centre and details of payments made to Infosys, which it hired to execute the hardware and software part of the GST project.
Though there were reports that the summons were withdrawn, Shah told IANS, “If I have to get information, there has to be legal procedure. That legal procedure cannot be a letter saying ‘dear please give me information’. The legal procedure is whereby I bind you to give information and that procedure is known as summons.”
Though refusing to divulge details of the inquiry, he said that the information sought by CBEC has been provided by GSTN.
“Summons is not for the individual, it is for the office to provide the information. That information has been provided by them (GSTN),” Shah told IANS.
GSTN was set up in March 2013 as a non-profit, non-government company and is 51 per cent owned by banks and financial institutions.
It was established to assist and engage with various stakeholders in preparing information technology and communications related infrastructure for smooth roll out of the GST.
The Centre owns 24.5 per cent stake in GSTN, state governments own another 24.5 per cent, while the HDFC, HDFC Bank, ICICI Bank and NSE Strategic Investment Corporation own 10 per cent each.
LIC Housing Finance holds 11 per cent stake in GSTN, according to the Registrar of Companies (RoC) filings, obtained by IANS from business research platform Tofler.
GSTN’s total assets stood at Rs 143 crore, with revenues at Rs 16.3 crore as on March 31, 2016, according to the information obtained from Tofler.