Govt. Includes ‘Goods and Services Tax Network’ under PMLA to Enable Sharing of Data with ED

Notification No. G.S.R. 491(E)., Dated 07.07.2023

Earlier, the Ministry of Finance vide Notification No. G.S.R. 381(E), Dated 27.06.2006, specified a list of agencies that were required to share information with the Enforcement Directorate (ED), the Financial Intelligence Unit (FIU) and other investigative agencies under the Prevention of Money-laundering Act, 2002 (PMLA).

Now, the Central Government has expanded the scope of PMLA by including the Goods and Services Tax Network (GSTN) in the list of agencies. GSTN is an information technology system responsible for managing the GST portal.

These changes have been made w.r.t section 66 of PMLA, which mandates the disclosure of information by the person as specified by the director or any other specified authority.

Prior to this inclusion, there were already 25 agencies, including the Competition Commission of India, Reserve Bank of India, SEBI, Insurance Regulatory and Development Authority of India (IRDA), Serious Fraud Investigation Office (SFIO), and Director General of Foreign Trade (DGFT). The inclusion of GSTN has been made as the 26th entry in the list of agencies.

At present, the GST Act, under Section 158 gives the power to disclose the information it has with regard to any prosecution under the IPC and even under any other law in force for the time being. However, there was no corresponding power under the PMLA to disclose information to the GSTN unless notified under Section 66(1)(ii) of the PMLA. With the current notification, GSTN has now been included in the list.

The inclusion of GSTN in the list facilitates the effective sharing of sensitive data, aiding the Enforcement Directorate in investigating and recovering evaded revenue through money laundering. This decision is expected to have a significant impact on enhancing the effectiveness of prosecutions and investigations related to GST violations.

The notification will now facilitate the sharing of information or material in possession between the ED and GSTN if ED has reasons to believe that the provisions of the GST have been contravened.

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