GST intelligence investigates Panjab University for Rs 38 lakh fraud

CHANDIGARH: Panjab University is being probed by the directorate general of goods and services tax intelligence (DGGI)-a wing under the finance ministry- for allegedly evading service tax of around Rs 38 lakh between 2013 and 2017. The university allegedly did not pay any service tax on the fee it collected from colleges for granting them new affiliations, extending their ongoing affiliations and so on. It also did not pay any service tax on the fee it collected from students at their coaching centre for IAS and other competitive examinations.The DGGI found PU's income from the above sources to be Rs 2.86 crore, which attracted a service tax of Rs 38.66 lakh. A notice issued by the DGGI to PU reads: "Intelligence gathered by the officers of DGGI, Chandigarh zone, indicated that PU is engaged in granting affiliation activity to colleges in Chandigarh and in Punjab, for consideration in the form of application and affiliation fee, continuation fee, temporary extension of affiliation fee, permanent affiliation etc. It is also engaged in providing coaching to aspirants of IAS and other competitive exams but was not paying any service tax on the amounts so collected."PU argued that the fee was charged to colleges to defray the expenditure involved in carrying out inspections by the university, processing and examination of various documents, which are required to ascertain whether the concerned college fulfils the conditions of grant of affiliation as prescribed to ensure maintenance of quality and standards in higher education."Since such fees from colleges are collected in relation to regulatory functions of the university, which are integral part of system of education. In our view such considerations are not subject to levy of service tax," PU said.The DGGI notice, however, maintained that collection of affiliation fee by PU was taxable service as it does not "appear to be covered" under the entries mentioned in the negative list of education related services exempted from service tax, nor was it a part of auxiliary education services exempted from service tax.Further, the DGGI, citing section 65(27) of the Finance Act, stated that PU was also bound to pay service tax for running the IAS centre since it was a commercial training/coaching centre being run to help aspirants compete in various national and state-level examinations."Thus, it appears PU has contravened the provisions of sections 67, 68, 69, 70, 91, 95, 115 and 161 of the Finance Act, as it failed to assess and discharge its service tax liability, failed to file its returns correctly, and failed to pay secondary and higher education cess, Krishi Kalyan Cess and Swachh Bharat Cess on the taxable services," the notice stated.It also said that PU was liable to pay interest on the amount of service tax not paid by them, besides various penalties under the sections of the Finance Act it violated.In reply to the notice, PU registrar Karamjeet Singh wrote that they deny all the allegations "which are incorrect and based on the wrong appreciation of facts."The reply maintained that services provided by educational institution in respect of education were exempted from service tax. "Since PU is solely engaged in imparting education and the affiliation fee charged is directly relation to its main objective, which is to impart education, the affiliation fee is exempted from service tax," the reply stated.It requested the department to drop the proceedings against the university and grant them personal hearing.