Chennai: A potential conflict is brewing between the Union and Tamil Nadu govts after the Chennai zonal unit of the directorate general of goods and services tax (GST) intelligence demanded that Anna University pay 5.4 crore GST on research grants received between 2017 and 2022. 

The showcause notice from the Chennai zonal unit, based on data obtained from the Ministry of Education’s NIRF dated June 15, said Anna University received grants of about 203 crore between 2017-18 and 2021-22 on which GST payable is 36 crore.

It has asked the university to explain within 30 days why 5.41 crore (IGST of 4.17 crore, CGST of 61 lakh and SGST of 61 lakh) should not be demanded along with interest and penalty.

Sources in the zonal unit told TOI that similar letters were being sent to other institutions, including central institutions and deemed universities. “We held discussions with the institutions. The showcause notices were sent after detailed discussions on the issue. We are convinced that as per regulations, universities must pay tax on these grants,” the official said. 

With just two days left to contest the notice, state govt officials said imposing GST on research grants will stifle research and divert funds away from crucial projects. “Research is an integral part of higher education programme at Anna University. World-class research will not just benefit students and the academic environment but also be beneficial to society. Most universities struggle to get adequate grants for research. We will ensure funds don’t dwindle,” said higher education secretary Pradeep Yadav. 

Higher education department will work with finance and legal departments to challenge the showcause notice, a senior official said. The state, he said, is planning to move court challenging the jurisdiction of the Chennai zonal official. “Research isn’t business. There can’t be tax on research grant given to a state-run university,” the official said.

Senior academics said levying GST on research grant is not only regressive taxation but a huge burden for progressive research universities. “They will financially weaken universities. This will not only affect research outcomes but also learning outcome of students,” said a senior academician. Experts say the state must convince the Union finance ministry to convene a meeting to discuss this.