Punjab’s IK Gujral University caught in Rs 800 crore tax evasion mess

The IK Gujral Punjab Technical University has turned out to be the biggest Income Tax defaulter in the state with a tax liability of a whopping Rs 800 crore.

The finance department officials of the university have landed it in a mess as it has been functioning in violation of income tax laws.

The tax authorities have concluded that IK Gujral Punjab Technical University (PTU) did not serve the professed charitable cause of imparting quality education but indulged in sheer profiteering and accumulating fixed deposits of Rs 1,532 crore. PTU is funded by Punjab and the Central governments. It is registered as a private society under the Societies Registration Act.

Under the Income Tax law, an educational institute can accumulate 6 to 15 percent of its total receipts as “incidental and reasonable” income for a period of 5 years for augmenting and expansion purposes. The institute is bound to inform the I-T department about the accumulation of the money.

Documentary evidence shows that the PTU miserably “failed to achieve the aims and objectives” for which it was set up in 1997. It also failed to convince the I-T authorities that it fell into the charitable institution category.

The Income Tax Appellate Tribunal, in its order of February 2018, rejected PTU’s plea to be exempted from income tax as it was a charitable institute. The Tribunal recorded that the university was charging fees at par with private institutes earning huge profits without promoting affordable education. The funds received under various central and state government schemes were not fully utilised but were parked in banks to earn interest between Rs 75 crore to Rs 99 crore annually.

The board of governors of the university on realising the fault of the finance department officers who kept accumulating huge funds, had recommended strict penal action against those responsible for violating the mandatory conditions for running a charitable organisation, in a meeting on January 9, 2019.

The IT notices sent by the department from 2011 to 2016 mentioned that PTU was not filing its income tax returns nor was it maintaining a balance sheet of its finances. When the BOG questioned the finance department, the officers concerned ignorantly replied that they did not know whether the university was liable to be taxed.

The matter was taken to the High Court seeking a stay on tax claims. The I-T department’s senior standing counsel Denesh Goyal opposed it and convinced the court that the university was cocking a snook at the statutory requirements of income tax law. The court finally did not grant a stay order.

According to I-T department sources, PTU had deposited a part payment of more than Rs 150 crore of the yearly tax claims and kept the remaining amount pending. The pending dues will again incur penal interest once the department wins the case from the High Court.

Financial wisdom required that the university pay tax claims in full when it had sufficient funds in banks to avoid penal interest later. If the university won the case, the IT department would return the money with interest.

Inquiries with PTU revealed that the bungling in tax payments mostly pertained to the period starting from 2012 to 2018 when S. K. Misra was the finance officer. In spite of BOG’s directions of February 2019 action was not taken against him and other finance department officers who put the university in a mess. Later, litigation was started in the High Court.

When contacted Misra, who now stood elevated as registrar, said that he would get back with answers to the queries sent to him but despite several reminders, he did not provide any information.

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