Educational activity exemption covers university affiliation, examinations, degrees and ancillary campus rentals from service tax.

Universities' affiliation work, conduct of examinations, award of degrees and related campus activities were treated as part of their educational function and not as separate taxable services. Rental income from premises let out for facilities such as banks, a post office and a canteen was also regarded as ancillary to the educational activity, rather than an independent service liable to service tax. On that basis, the service tax demand could not be sustained and the impugned notices and order were set aside in favour of the universities.

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Issues: Whether the universities' affiliation activities, conduct of examinations, award of degrees and rental income from campus properties used for student and staff amenities were liable to service tax or were exempt as educational activities.

Analysis: The dispute was held to be covered by the earlier decision dealing with universities and the scope of educational services. Affiliation, examinations, award of degrees, and allied campus activities were treated as part of the educational function of the universities. The rental income from premises let out for facilities such as banks, post office and canteen was also treated as ancillary to the educational activity and not as a separate taxable service for the purpose of service tax.

Conclusion: The demand of service tax could not be sustained and the impugned notices and order were liable to be set aside in favour of the universities.

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