–Audit reports submitted by upscale private schools reveal that directors had drawn Rs62m in salaries in 2017
–SC orders FIA and FBR to freeze accounts of Lahore Grammar School and scrutinise its tax records, orders audit of 21 other private institutes
ISLAMABAD: The Supreme Court (SC) on Thursday ordered elite private schools to cut their fees by 20 per cent and to return the money that they had charged for summer vacations.
The top court’s order applies to private schools across the country whose fees are in excess of Rs5,000.
The court, while hearing a case pertaining to exorbitant fees charged by private schools, had in October ordered the institutes to furnish their respective audit reports, and formed a committee to find a solution to the issue.
Audit reports were submitted by Beaconhouse School System (BSS), The City School, Lahore Grammar School (LGS), Roots School System (RSS), Bayview Academy and 15 other schools in court. It was stated that the directors and top officials of the BSS and LGS had received Rs62 million in salaries in 2017. A total of Rs512m was spent on employees’ salaries in one year, while Rs5.2 billion was spent in five years, the reports said, adding that various facilities were also provided.
“Have these schools bought uranium mines or gold mines?” the CJP questioned.
“Each director gets a salary of Rs8.3m,” Justice Nisar said. He observed that the LGS audit report appeared to be incorrect, and expressed his displeasure with the auditor, saying they should be caught and handed over to the Federal Board of Revenue (FBR).
“Children are not getting relief of even Rs2 … You have taken advantage of citizens to mint money,” the chief justice asserted. “If children are unable to pay these fees, they cannot get admission to these schools.”
“Private school owners have opened schools in rented bungalows and earn huge amounts off each room,” the chief justice observed.
“No school had its fees approved by any regulator,” Faisal Siddiqui, the counsel for students’ parents, told the court.
Justice Ijazul Ahsan noted that the schools had provided incorrect figures in their audit reports. “Look at how directors are receiving Rs8.3m in salaries,” he said.
“If you try ripping up or even eating Rs8.3m, it will be never-ending,” the chief justice commented.
BSS counsel Shahid Hamid argued that the institute had paid Rs764m in taxes. He also told the court that Punjab had about 54,000 private schools.
“You may have paid a lot of taxes, but the students are not getting any benefit from them,” Justice Ahsan responded. “They will only be benefited when the fees are lowered.”
“If children’s education is being affected, then the court will play the role of a parent,” the CJP asserted.
The FBR chairman and FIA director general were summoned to court immediately.
The chief justice remarked that the FBR should check the tax record for the last seven years and, addressing the BSS lawyer, said that he would not let them close down their schools.
“We will take action against anyone who tries to shut their school down,” he warned.
The law secretary told the court that certain schools had increased their fees by 63pc in five years.
The court was told by Ayesha Hamid, a lawyer for the schools, that all were ready to reduce their fees by 8 per cent, to which the top judge responded that the decrease was much too small.
Justice Ijaz noted that if there is an 8pc increase in school fees annually, there would be a 32pc increase in four years.
“You people say you are making up for the shortcomings of government schools,” he said, “But actually, you have established a monopoly.”
“All schools should be consulted over whether they are ready to decrease their fees by 20pc,” Justice Ahsan suggested.
“The fees should be reduced by 20pc and the schools should also return the summer fees,” Justice Nisar asserted.
“We will decide in the future how much you can increase your fees,” the chief justice said, deciding that a 5pc fee increase annually was appropriate. He added that a regulator could later see whether the fee increase needed to be set any higher.
The court subsequently ordered a 20pc reduction in the fees of all private schools, and directed them to return the fees they had charged for summer vacations.
Additionally, the court passed the order that private schools can only increase their fees by 5pc each year, and ruled that no private school would be shut.
The court directed FIA to freeze the accounts of LGS and BSS, and FBR to scrutinise its tax records and to seize the details of its accounts. Additionally, the court said that an audit should be conducted of 21 other private schools.
The case was adjourned until Dec 26.