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The faculty of the Indian Institutes of Technology may be the most sought by the industry for consultancy work, but instead of getting paid for the job, they sometimes end up spending from their own pockets.
Six institutes, including IIT-Delhi, IIT-Kharagpur and IIT-Mumbai, failed to recover service tax (Rs 1.16 crore) from their clients for consultancy services and ended up paying the amount to the government from their own pockets, the Comptroller and Auditor General of India report said.
As per provisions of the Finance Act, 1994, service tax is leviable on scientific and technical consultancy services.
In July 2001, the provisions of this Act were amended making the public funded research institutions including the Indian Institutes of Technology liable to charge service tax from the clients for such services, CAG report for FY'05 said.
The report said IIT, Delhi, had received Rs 4.21 crore on account of consultancy services rendered from July 16, 2001, to December 26, 2002, without recovering service tax of Rs 21.05 lakh at the prevailing rate of five per cent.
In response to Audit observation (February 2004), IIT-Delhi deposited Rs 21.05 lakh as service tax out of its own income instead of recovering it from the clients. Thus, failure to adhere to conditions on service tax resulted in the IIT incurring expenditure out of its own funds.
Similarly, Rs 95.15 lakh was paid by five others -- IIT-Kharagpur, IIT-Mumbai, MNNIT-Allahabad, NITIE-Mumbai and VNIT-Nagpur -- out of their own funds.
On the matter being pointed out, IIT-Kharagpur admitted the mistake, but said it was under the impression that service tax would not be applicable to IIT.
SM