Indore: In a major setback to Devi Ahilya Vishwavidyalaya, Central Board of Excise and Customs has rejected university’s explanation and directed it to pay Rs 4.71 crore as service tax on revenue generated through affiliation fee. In a notice to DAVV in July 2018, Central Board of Excise and Customs had stated the university should pay service tax on earning made through charges imposed on colleges for granting affiliation.
The university awards affiliation to colleges and in return charges fee. The university holds exams, issues mark sheets and grants degrees to students of affiliated colleges. So, obtaining affiliation from university is mandatory for colleges. The Central Board of Excise and Customs set its eye on this income and sought service tax.
The Board had calculated service from 2011-2012 and 2016-2017 and sent a recovery notice of Rs 4.71 crore to the university asking it to deposit it at the earliest. But university denied paying. In its reply to the Board, the university stated, “Educational institutions are exempted from service tax so it is not liable to pay service tax.”
“Central Board of Excise and Customs was also informed that it did not receive direction from state government for payment of GST,” registrar Ajay Verma said. But the board rejected DAVV’s reply stating that the university is required to pay GST on income made through sources other than course fee. Verma said DAVV will appeal against board’s order.
Recovery will be difficult
Anticipating that it may have to pay service tax on affiliation fee, the university had started collecting 18 percent GST from colleges from 2018-19 academic session. But the problem is that the board had sought GST from 2011-12 to 2016-17. It will be difficult for university to recover tax retrospectively. “No college will give service tax for previous years,” an official said adding that if the university would face litigation if it pays it.
