University affiliation fees to affiliated colleges subject to 18% GST under Section 66 Notification 12/2017-CT

AAR Rajasthan ruled that affiliation fees collected by a university from affiliated colleges are not exempt from GST under S. No. 66 of Notification No. 12/2017-CT (Rate). The authority determined that affiliation services enable institutions to conduct courses but do not relate to student admission or admission examinations, which are the specific services exempted under the notification. The ruling clarified that 18% GST applies to such affiliation services, distinguishing them from exempted admission-related services.

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Issues Involved:

1. Whether the services provided by the University of Kota relating to affiliation granted to colleges for imparting education is a supply of service liable to levy of GST under the CGST Act, 2017.
2. Whether the amount collected by way of affiliation fee is exempted vide S.No 66 of Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Issue-wise Detailed Analysis:

1. Whether the services provided by the University of Kota relating to affiliation granted to colleges for imparting education is a supply of service liable to levy of GST under the CGST Act, 2017:

The applicant, University of Kota, contended that it is a government-established university engaged in providing educational services, including granting affiliation to various colleges. The university argued that affiliation is a statutory function and an integral part of providing educational services, which should be exempt from GST. The university emphasized that affiliation fees are part of the fees received towards providing recognized courses and degrees to students, thus falling under the exemption for educational services as per Notification No. 12/2017-CT (Rate) dated 28.06.2017.

The Authority for Advance Ruling (AAR) examined the submission and relevant provisions. It noted that the affiliation services provided by the university enable colleges to conduct courses and do not directly relate to the admission of students or the conduct of examinations. The AAR referred to the definition of affiliation, which involves recognizing a college to conduct courses and ensuring it meets the required standards. The AAR concluded that the affiliation services are not directly related to the admission of students or the conduct of examinations, and therefore, do not fall under the exemption provided in the notification.

2. Whether the amount collected by way of affiliation fee is exempted vide S.No 66 of Notification No. 12/2017-CT (Rate) dated 28.06.2017:

The applicant argued that the affiliation fees collected should be exempt from GST as they are part of the educational services provided by the university. The university cited various judicial pronouncements and circulars to support its claim that services related to education are exempt from GST. The AAR examined the relevant provisions and amendments to the notification. It referred to the exemption under S.No 66 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, which exempts services provided by educational institutions to their students, faculty, and staff, as well as services related to admission or conduct of examinations.

The AAR noted that the amendment made on 25.01.2018 expanded the exemption to include services related to admission or conduct of examinations for all educational institutions. However, the AAR clarified that the exemption applies only to services directly related to the admission of students or the conduct of examinations for admission. The affiliation services provided by the university, which involve recognizing and approving colleges to conduct courses, do not fall under this exemption.

Conclusion:

The AAR ruled that the affiliation services provided by the University of Kota to its constituent colleges are a supply of service liable to GST. The affiliation fees collected by the university are not exempted under S.No 66 of Notification No. 12/2017-CT (Rate) dated 28.06.2017, as amended. The ruling emphasized that the affiliation services are not directly related to the admission of students or the conduct of examinations, and therefore, do not qualify for the exemption provided in the notification.

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