Are IIMs manpower recruiting agents?
The Service Tax department thinks so. And so they would want the IIMs to pay Service Tax. The IIMs are not impressed. Recently the IIM graduates got employed from the campus with fancy salaries. The Service Tax department thinks, it is entitled to a share in the booty.
IIM, Ahmadabad Director Bakul Dholakia feels that the IIMs are not liable to pay Service Tax. According to him, the IIM-A is not a manpower recruiting agency and therefore does not come under the purview.
He admitted that the IIMs are charging US $5,000 to Rs 1,50,000 per candidate. The director said the institute incurred Rs 3.5 lakh as expenses on each student of the post-graduate programme of which Rs 1.5 lakh were recovered as fees from the students while the rest were recovered from the companies who came for campus recruitments.
"IIM-A can by no stretch of imagination be compared with a manpower placement agency. We are opposing this on principle," according to the IIM-A Director, Prof. Bakul Dholakia.
The IIMs collect the placement fees from recruiters only to keep the cost of education low for the students and this principle has been agreed upon by the Government, Prof Dholakia said.
Asked what would happen if the IIM lost its case with the Service Tax Department, Prof Dholakia said the companies visiting the campus had been informed about the possible liability. However he added that, we oppose it as we are an educational institute and not a placement agency”.
Service Tax officers are fond of summoning officers and the summons look very threatening. Recently a professor was summoned to furnish particulars for a subsequent period to a period for which he had already been given Show Cause Notice. His plea that for furnishing records, he not need not be physically present was not appreciated. They insisted that he should appear in person. Now the IIM director is in serious danger of being summoned by a Superintendent. The policy of the government is to encourage education not to tax it???