CAG report: Rs 5.31 cr GST default by 2 universities in Punjab

The Comptroller and Auditor General (CAG) report tabled in the Punjab Vidhan Sabha today showed that Punjabi University, Patiala, and Sardar Beant Singh State University, Gurdaspur, were defaulters of the Goods and Services Tax (GST) worth Rs 5.31 crore for the period between July 2017 and March 2022.

The report, asking for interference by the state government for the recovery of taxes, also said that the reply of the government was awaited till February 2024.

The Report I of the year 2024 for audit of the year that ended on March 31, 2022, said the objections to the GST submitted by the institutions in their replies had been turned down because they did not comply with the GST rules.

As per the notification issued by the Punjab government on June 30, 2017, “the services provided to educational institutions by way of security or cleaning or housekeeping were not exempted from Goods and Services Tax (GST)”.

The audit scrutiny of records of the two institutes revealed that these institutions had received security services and employment/ labour services valuing Rs 30.55 crore from six different service providers between July 2017 and March 2022. Only one educational institute paid Rs 19 lakh under forward charge mechanism to one service provider. The remaining GST of Rs 5.31 crore was not paid.

In its reply filed to the CAG, Punjabi University said the service providers never charged the tax. Meanwhile, Sardar Beant Singh State University replied that only one service provider had charged the GST in its invoices and the same had been paid.

Coming down strongly on the replies, the CAG said that replies of the defaulters were not acceptable. Both institutes were expected to be aware about their liabilities under the GST law while receiving the taxable services. They were also expected to know whether those services were taxable under reverse charge mechanism or forward charge mechanism, as the financial burden of the GST (being an indirect tax) was ultimately to be borne by the institutions.

Their response

• In its reply filed to the CAG, Punjabi University said the service providers never charged the tax
• Sardar Beant Singh State University replied that only one service provider had charged the GST in its invoices and the same had been paid