Jaitley clarifies on GSTN audit, says CAG will do it

New Delhi: Clearing the air on audit of the firm providing IT backbone for GST, Finance Minister Arun Jaitley on Monday said the Comptroller and Auditor General of India will audit the Goods and Services Tax Network (GSTN).

In a rebuff of party colleague Subramanian Swamy, he defended the equity structure of GSTN saying he did not find anything wrong in government holding 49 per cent stake in the company.

Swamy has repeatedly questioned the shareholding pattern in the GSTN, terming it “a shady organisation” that was a “grave security” issue.

“The present structure of GSTN was decided by the United Progressive Alliance (UPA) when Mr P Chidambaram was the finance minister. I have personally reviewed the entire structure and I saw no reason to disagree with him,” Jaitley told CNBC TV18.

He reasoned that GSTN has to match various vouchers, literally in hundreds of crores every month and therefore it needs an extremely efficient IT network.

“A government body — will it be able to do that, will a government body be able to hire the best experts at the market value salaries,” he asked.

And therefore the structure which was conceived was that the central and the State governments will together own 49 per cent of the equity. The rest of the 51 per cent would be with “some very responsible bodies” like LIC Housing, National Stock Exchange (NSE), HDFC Bank and so on, he said.

“So it technically gave the flexibility to the GSTN to hire the best IT experts otherwise if you were a government body then the usual problem comes up, the salary structure must be the government salary structure and you stand to lose out on that,” he said.

Jaitley said the CEO will be appointed by the government and every decision would be with a positive vote of the government, thereby giving a veto to the government. Also, the majority on the board will be government appointees.

“And now I have clarified and passed an order, the CAG will audit the GSTN,” he said.

GSTN had previously objected to an audit by CAG. At the core were issues of access to the GSTN’s own books, the GST tax data and the information technology (IT) infrastructure created by the GSTN.

“So the government has a veto, the government has a majority on the board, the government appoints the CEO, the CAG audits and you technically kept the structure a little flexible, so as to give that flexibility to the GSTN to hire the best minds,” he said.