The Indian Institute of Management-Ahmedabad (IIM-A) has sought the intervention of the HRD Ministry after an order passed by revenue authorities demanded that the institute pay Rs 52 crore as service tax.
The premier business school, The Indian Express has learnt, wrote to the ministry on January 31 drawing its attention to the Principal Commissioner of Central GST (Ahmedabad South) levying service tax on the fee charged by IIM-A for four postgraduate programmes.
The Department of Revenue under the Finance Ministry has considered the two-year postgraduate programme (PGP), the postgraduate programme in food and agri-business management (PGP-FABM), the fellow programme in management — equivalent to a PhD — and the one-year postgraduate programme in management for executives (PGPX) as taxable since 2009-10.
Accordingly, the Revenue Department has demanded Rs 52 crore as tax, for the period 2009-10 to 2014-15, on the fee received for these courses.
IIM-A confirmed that it has requested the HRD Ministry’s intervention. “We have made a request to the HRD Ministry on the matter and the matter is being pursued. IIM-A has appealed to the Tribunal on February 13, 2018,” said Deepak Bhatt, manager, communications, at IIM-A.
With the revenue department treating IIM-A as a “commercial coaching centre” to levy taxes, the institute, in its letter to the ministry, has said that it is an educational institute and has always been covered under categories that are exempted from paying service tax.
To strengthen its case, IIM-A has also quoted a Finance Ministry notification on March 1, 2016, which categorically exempts the two-year full-time PGP, fellow programme in management and the five-year integrated programme in management, offered by all the IIMs, from being treated as chargeable to service tax.
“As the Principal Commissioner of Central GST has passed an order, the institute has no option but to appeal to the Tribunal by paying Rs 4.01 crore as per deposit fee, 7.5% of the service tax demand of Rs 52 crore, which will block the fund and strain the resources of the institute,” the four-page letter states.
“Given this background, I am writing to request you for your kind support and intervention in this matter. Through your good office, we request that our case be represented with the Ministry of Finance to revoke the order passed by the Revenue Authorities,” added the letter, written by director Errol D’Souza.
According to sources, IIM-Calcutta (IIM-C), too, has written to the HRD Ministry in April seeking clarification on the whether GST can be levied on its courses after the implementation of the IIM Act.
While the Finance Ministry’s notification of March 1, 2016, exempts only four long-term programmes offered by the IIMs, with the premier business schools now getting statutory backing by law, IIM-C has sought clarification on whether its postgraduate diploma in business analytics and management development programmes will also be exempt from GST.
The HRD Ministry is learnt to have forwarded IIM-C’s letter to the Finance Ministry for clarification.