Editorial – May 2018

Under the garb of implementing the GST regime, BSNL’s top management has sent a proposal for the “information and further necessary instructions” of the DoT under which it intends to amend the purchase orders issued in 2014, in a manner that would mean passing on over Rs 1,000 crore illegitimate favour to seven contractors of the NFS project.

The Network for Spectrum (NFS) project is financed by the USO Fund. It is being implemented by BSNL. Under this, 57,015 km of optical fiber cable is being laid for the Defence forces so that they can swap the existing spectrum with the fiber-network enabling the government to auction the vacated spectrum for commercial use.

The total value of the projects awarded is Rs 11,747 crore, which is inclusive of all taxes and levies. About 77.79 per cent of the project value is towards service charges while the rest is for material. The tender conditions are such that the tax rates cannot be changed to the disadvantage of the government if the contractor has not implemented the project in time.

Keeping in mind this condition, initially, BSNL revised all the seven orders making them GST compliant without any additional financial burden to the government, but for some unknown reason, it has taken a u-turn in the matter.

Looking at the tax rates quoted in the bids based on which BSNL had issued the purchase orders, and the current rate of tax under the GST regime, as per our estimates, the difference would be as high as Rs 1,000 crore. This GST Scam is in pipeline, and we will keep a watch on DoT’s next move in this matter.