Fake Educational Institutions - Whether de-recognition or branding of universities/institutions as fake result in attracting service tax levy?

By Vijay Kumar

THE Central Government, through University Grants Commission (UGC) and All India Council for Technical Education (AICTE), keeps a watch over the fake universities and the unapproved technical institutions. The UGC has identified 21 universities/institutions as fake running in various parts of the country, in contravention of the UGC Act, 1956, out of which 8 are in Uttar Pradesh, 6 are in Delhi and 1 each in Bihar, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu and West Bengal. Similarly, the AICTE had identified 348 institutions running technical and management courses/programmes in violation of the AICTE Regulation dated 6th January, 2005. Out of these total number of unapproved institutions, 75 each are in Delhi and Maharashtra, 52 in Andhra Pradesh, 34 in West Bengal, 30 in Uttar Pradesh, 26 in Karnataka, 17 in Haryana, 14 in Tamil Nadu, 9 in Chandigarh, 4 in Gujarat, 2 each in Bihar, Himachal Pradesh, Punjab, Rajasthan and Goa and 1 each in Uttrakhand and Kerala.

The UGC has taken legal action in various courts against 6 of these fake universities. The State Governments have also initiated action against certain fake universities. Show-cause notices have also been served by the UGC to some of the fake universities/institutions and by the AICTE to the unapproved institutions for closure of their programme.

This information was given by the Minister of State for Human Resource Development Smt. D. Purandeswari, in a written reply to a question, in the Lok Sabha yester day.

Now the pertinent question is, if these institutions were not recognized by the statutory bodies under the relevant laws, then the courses offered by them as well as the certificates awarded by them would be unrecognized by law to gain exemption from levy of tax. It will be interesting to see how the service tax authorities will go about collecting dues from these fly by night ‘fake' universities and institutions.