The government has amended provisions of the money laundering Act to allow the enforcement directorate (ED) to share information with GST Network.
The move would help recovery of Goods and Services Tax (GST) evaded through money laundering.
GSTN handles the technology backbone of the indirect tax regime and is the repository of all GST-related information, including return, tax filing and other compliances.
As per the amendment to the provisions of Prevention of Money Laundering Act (PMLA), 2002, GSTN has been included in the list of entities with which ED will share information.
AMRG & Associates Senior Partner Rajat Mohan said notifying GSTN under PMLA would enable a legal framework under which high-value tax offenders can be traced, apprehended made liable to pay due taxes.
“GSTN can pass on relevant information on probable tax offenders to jurisdictional officers so as to initiate proceeding under GST law for scrutiny, adjudication and recovery of taxes,” Mohan added.
Nangia Andersen LLP Partner Sandeep Jhunjhunwala said the inclusion of GSTN under PMLA will now facilitate mutual sharing of information or material in possession of the Enforcement Directorate with GSTN if they have reasons to believe that provisions of GST Act have been contravened in any manner.
“Currently, GST Act under Section 158 gives power to disclose information it has with regard to any prosecution under IPC and even under any other law for the time being in force. However, there was no corresponding power under PMLA to disclose information to GSTN unless notified under Section 66(1)(ii) of PMLA. With the current notification, GSTN has now been included in the list,” Jhunjhunwala said.
KPMG National Head & Partner, Indirect Taxes, Abhishek Jain said this move would help ED in probing against GST evasions. “Given the detailed financial disclosures under GST, such information should help larger investigation objectives of ED and also aid GST recovery in larger evasion cases,” Jain added.
In November last year, the government had allowed the ED to share information about economic offenders with 15 more agencies, including SFIO, CCI and NIA, Following that notification, the ED, which deals primarily with cases of money laundering and violations of foreign exchange laws, was allowed to share data with a total of 25 agencies, including the 10 specified earlier.
The list also includes CBI, RBI, Sebi, IRDAI, Intelligence Bureau, and Financial Intelligence Unit (FIU), among others.
With the addition of GSTN, the list of entities now stands at 26.
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