Parl panel criticises MEA for tax exemption to South Asian University registrar

A 2021 CAG report pointed out that a notification on the South Asian University issued by the ministry in January 2009 wrongly extended privileges to the registrar for grant of income tax exemption

NEW DELHI: A parliamentary panel has criticised the external affairs ministry for a gazette notification of 2009 that erroneously granted income tax exemption to the registrar of the South Asian University and resulted in a loss of ₹90.06 lakh to the state exchequer.

PAC said MEA’s submission that the anomaly was a “genuine error” that occurred at the time of printing was “neither convincing nor sufficient to completely rule out the possibility of complicity” (Photo/https://sau.int/)

In a report presented to both houses of Parliament on Monday, the Public Accounts Committee (PAC) chaired by Congress MP Adhir Ranjan Chowdhury noted that the loss of revenue was first highlighted by the Comptroller and Auditor General (CAG) in a report published in 2021. The panel was briefed on the matter by officials of CAG and the external affairs ministry.

The CAG report pointed out that a notification on the South Asian University issued by the ministry in January 2009 wrongly extended privileges to the registrar for grant of income tax exemption since the agreement signed by member states of the South Asian Association for Regional Cooperation (Saarc) for establishing the varsity allowed for tax exemption only for the university’s president and faculty members.

The PAC report underlined that the reasons for including the post of registrar in the gazette notification “were not on record”, and that the panel was “perplexed” that such an error crept in despite the notification being vetted by the external affairs and law and justice ministries.

Besides calling for a review and strengthening of procedures followed by the external affairs ministry for issuing gazette notifications, the PAC said the ministry’s submission that the anomaly in the notification was a “genuine error” that occurred at the time of printing and that there was no mala fide intention was “neither convincing nor sufficient to completely rule out the possibility of complicity”.

The PAC called on the external affairs ministry to investigate the matter in detail and take appropriate action against the officials responsible for the lapse.

The external affairs ministry became aware of the error when the South Asian University’s first registrar, appointed in 2011, approached the ministry for a diplomatic identity card and tax exemption certificate. The ministry advised the university in 2011 and 2012 to stop granting tax exemption to the registrar. Despite this, the university kept granting tax exemptions to the registrar during 2011-2020. The CAG audit concluded that this resulted in revenue losses of ₹90.06 lakh between July 2011 and December 2017.

The external affairs ministry told the PAC that another gazette notification issued in May 2021 corrected the anomaly in the 2009 notification with retrospective effect and that the income tax authorities have initiated recoveries from the individual concerned.

The PAC also criticised the South Asian University for overlooking the external affairs ministry’s advice to not grant tax exemption to the registrar and said there should be constant consultations between international organisations and the government to ensure effective management of situations.