The Central Board of Indirect Taxes and Customs Chairman, Vivek Johri, clarified that there is no reverse flow of information that will happen after bringing the Goods and Service Tax Network (GSTN) under the ambit of the Prevention of Money Laundering Act, 2002 (PMLA). The clarification was made to address the apprehensions raised by some states regarding the interference of investigating agencies in businesses.
The amendment to the PMLA includes GSTN in the list of entities with which the Enforcement Directorate will share information. However, the intention behind this move is to enable the sharing of information from the Financial Intelligence Unit (FIU) with GSTN. The GSTN can then use this information for risk assessment purposes.
The government's notification about this amendment had led to confusion and stress in businesses, as it was thought that GSTN would have to share information with both the Enforcement Directorate and the Financial Intelligence Unit. However, the clarification by Vivek Johri states that there is no provision for such a reverse flow of information, and businesses' information from the GST base will not be shared with any other law enforcement agency.
The move to include GSTN under the PMLA comes in response to the rising instances of GST fraud and fake registrations. By bringing GSTN under the PMLA, the indirect tax body aims to strengthen its efforts in detecting and preventing such fraudulent activities. This move was not discussed in the GST Council before its implementation, which had raised concerns among some Opposition-ruled states.
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