2022 (12) TMI 1100 - AAR - GST

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. ... Taxability of affiliation services - exemption under entry 66 of Notification No. 12/2017-C.T.(Rate) - services relating to admission to, or conduct of examination by, an educational institution - scope of phrase 'in relation to' in exemption entries - distinction between accreditation/affiliation and conduct of admission/examinationTaxability of affiliation services - exemption under entry 66 of Notification No. 12/2017-C.T.(Rate) - services relating to admission to, or conduct of examination by, an educational institution - Whether affiliation services provided by University of Kota to colleges are a taxable supply and whether affiliation fees are exempt under SI.No.66 of Notification No.12/2017-C.T.(Rate) dated 28.06.2017 as amended. - HELD THAT: - The Authority found that the University, established under the University of Kota Act, 2003, performs functions of recognition, approval and monitoring of colleges (affiliation) and collects affiliation fees. The exemption at SI.No.66 was examined in its amended form (w.e.f. 25.01.2018) and the Fitment Committee/GST Council material shows the amendment was intended to exempt services supplied to educational institutions that relate to admission of students or conduct of entrance examinations. Circulars and pre-GST case law relied upon by the applicant do not squarely cover affiliation fees under the present GST dispensation. The Authority held that affiliation, as understood from the University's statutes and the regulatory scheme, is an activity of recognising and ensuring institutional infrastructure and standards (approval for courses, increase in intake, continuation/permanent affiliation, monitoring), and is therefore distinct from services that are directly 'relating to admission to, or conduct of examination' for admission. Services such as approval of a college, grant/continuation of affiliation, permission to start courses or increase intake, and related regulatory functions do not fall within the exempted category which is confined to services in relation to admission or conduct of (entrance) examinations. Consequently, affiliation fees are not covered by SI.No.66 and are taxable as supply under GST. [Paras 13, 14, 15]Affiliation services provided by University of Kota are a taxable supply and the affiliation fees are not exempt under SI.No.66 of Notification No.12/2017-C.T.(Rate) dated 28.06.2017 as amended.Final Conclusion: The Authority ruled that the affiliation services rendered by the University of Kota to its colleges constitute a supply liable to GST and the amounts collected as affiliation fees do not qualify for exemption under SI.No.66 of Notification No.12/2017-C.T.(Rate) (as amended). 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.