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D. Murali

A CASE that came up before the Bangalore tribunal recently was about MGIT and GITAM, short for Mahatma Gandhi Institute of Technology, and Gandhi Institute of Technology and Management, on one side, and an angry taxman on the other. The story begins with MGIT importing computer systems in 2000, free of duty claiming the benefit of a Customs Notification, "on the basis of Essentiality Certificate issued by the Jawaharlal Nehru Technological Institute (JNTU), Hyderabad."

The taxman said that the certificate had been obtained fraudulently, to evade payment of duty, and that MGIT was not registered with the Department of Scientific and Industrial Research (DSIR). Also, that the institute failed to comply with the conditions of the notification, and that the imported goods were not exclusively utilised for research purposes.

You can catch up with some drama from the text of the tribunal's order: JNTU withdrew the essentiality certificate in June 2002, and the customs officials confiscated the computers and levied a redemption fine of Rs 16 lakh, plus a penalty of Rs 12 lakh. Moreover, a duty demand of Rs 25,43,605 was made, and interest also demanded. Shocked by all this, MGIT sought relief from the tribunal.

The institute's advocate Gowrishankara Murthy argued that there was no fraud. True, MGIT did not have a PhD programme, he said, but the faculty and the students undertake various research projects, he added. "In fact, some of the faculty members have registered for their PhD in other universities."

At the time of the import of the computer system, essentiality certificate was available, pointed out Murthy, and argued that its subsequent cancellation could not be a reason for denying the benefit of the notification. Registration with DSIR was required for the university that issued the certificate, and not for MGIT, submitted Murthy, and said that JNTU had withdrawn the certificate because it decided not to issue the same to colleges without PhD programme. For the department, it was Raja Ram who argued against granting the exemption.

The GITAM story begins with its import of `DS-10 Alpha Server Computer System with accessories of Compaq US,' and claiming of benefit under the same exemption notification. This institute had an essentiality certificated issued by the Registrar of Andhra University.

Tribunal members S.L. Peeran and T.K. Jayaraman heard the rival contentions and noted that a circular issued by the Ministry of Finance in 2004 allowed "on case-to-case basis" any privately funded college and educational institution "that is not a public funded research institution or non-commercial research institution" to get the benefit on the basis of essentially certificate issued by the university to which the college is affiliated. There's enough ambiguity and also scope for discretion to cause skews, you'd notice.

The tribunal said that there was no fraud in obtaining certificate from JNTU. Because JNTU kept issuing such certificates to all the institutions affiliated to them, till the taxman pointed out to them that it was violating the guidelines issued by the DSIR, which is when they sent letters to college principals, withdrawing `with immediate effect' the facility.

On its part, MGIT produced a list of "39 projects in the Department of Metallurgy and Materials Technology, Department of Computer Science and Engineering and the Department of Mechatronics (Mechanical Engineering)," and the tribunal said that the imported equipments could not be said to have been misutilised. "In fact, they have been utilised only for the research purposes," reads the order, setting aside the department's missives to MGIT. The other institute, GITAM, too came out in the clear because of the clarification given by the Ministry of Finance.

"Research is formalised curiosity. It is poking and prying with a purpose," says Zora Neale Hurston. By that yardstick, it's quite possible that the taxman too was doing some research into the Mahatma, and so would keep a watchful eye on what emerges from the projects in progress.

ExParte@TheHindu.co.in

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