CAG Report Exposes GST Default by Punjabi University and Sardar Beant Singh State University; State Government Urged to Recover Rs 5.31 Crore
Chandigarh, September 4, 2024 — The Comptroller and Auditor General (CAG) of India has raised serious concerns over the failure of two prominent universities in Punjab to comply with Goods and Services Tax (GST) regulations. The CAG report, tabled in the Punjab Vidhan Sabha on Wednesday, revealed that Punjabi University Patiala, and Sardar Beant Singh State University, Gurdaspur, defaulted on GST payments amounting to Rs 5.31 crore during the period between July 2017 and March 2022.
The report, which is part of the CAG audit for the year ending March 31, 2022, and published as Report I of the year 2024, disclosed that both universities had failed to pay GST on services related to security and employment/labour, which they had procured from various service providers. Despite clear notifications from the Punjab government issued on June 30, 2017, which stipulated that such services provided to educational institutions were not exempt from GST, these institutions did not comply with the tax laws.
During the audit, it was discovered that the two universities received services worth Rs 30.55 crore from six different service providers. Out of this, only one service provider was paid Rs 0.19 crore in GST under the forward charge mechanism by one of the universities. However, the remaining GST liability of Rs 5.31 crore was left unpaid.
In response to the CAG’s findings, Punjabi University stated that the service providers had not charged GST in their invoices, while Sardar Beant Singh State University claimed that only one service provider had included GST in his invoices, which had been duly paid. However, the CAG rejected these explanations, asserting that both institutions should have been aware of their GST liabilities, regardless of whether the service providers charged the tax or not.
“Both were expected to be aware of 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 because the financial burden of the GST was ultimately to be borne by the institutions,” the CAG report stated.
The CAG has called for immediate intervention by the Punjab state government to recover the outstanding taxes. As of February 2024, the government’s response to the CAG’s recommendations was still pending.
This report brings to light significant lapses in the financial management of these educational institutions and raises questions about their adherence to national tax laws. The state government’s action on this matter will be closely watched as it could set a precedent for handling similar cases of non-compliance in the future.
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