GST supply and exemption for university services: taxable in principle, but exempt when linked to educational functions.

University services to affiliated colleges and students, including inspections, admissions, examinations, valuation and issue of marks lists, were held to fall within "supply" under GST because the university collected affiliation and incidental fees and its activities answered the wide statutory meaning of business. The same services were also held exempt, however, because the university was treated as a governmental authority and the services were connected with educational functions entrusted under the constitutional scheme for Panchayats and Municipalities. GST was therefore payable in principle, but not on the services covered by Entries 4 and 5 of Notification No. 12/2017-Central Tax (Rate).

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Issues: (i) Whether the services provided by the university to its affiliated colleges and students fall within the scope of supply under the GST law; (ii) whether those services are exempt under the relevant entries in the exemption notification as services supplied by a governmental authority in relation to functions entrusted to a Panchayat or Municipality.

Issue (i): Whether the services provided by the university to its affiliated colleges and students fall within the scope of supply under the GST law.

Analysis: The statutory definition of supply is wide and includes supply of services made for consideration in the course or furtherance of business. The definition of business under the GST law is also expansive and covers not only commercial activity but other activities or transactions within its inclusive scope. The university collected affiliation and incidental fees while rendering services such as inspections, admissions, examinations, valuation and issuance of marks lists. On that basis, the services were held to be covered by the statutory meaning of business and therefore within the scope of supply.

Conclusion: The issue was answered against the assessee. The services were held to constitute a supply under Section 7 of the Central Goods and Services Tax Act, 2017.

Issue (ii): Whether those services are exempt under the relevant entries in the exemption notification as services supplied by a governmental authority in relation to functions entrusted to a Panchayat or Municipality.

Analysis: The university was treated as a governmental authority because it was established by a State Legislature and functioned with the requisite public character for carrying out educational functions. Education was treated as a function entrusted under the constitutional scheme relating to Panchayats and Municipalities. The services rendered to affiliated colleges were therefore held to be activity in relation to such functions, bringing them within the specified exemption entries in the notification.

Conclusion: The issue was answered in favour of the assessee. The services were held to be exempt from GST under Entries 4 and 5 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Final Conclusion: The ruling holds that the university's services are taxable supplies in principle, but the particular services in question qualify for exemption under the notification, so GST is not payable on them.

Ratio Decidendi: An activity may fall within the statutory scope of supply because the GST definition of business is broad, yet still be exempt where it is supplied by a governmental authority in relation to constitutionally entrusted functions covered by the exemption notification.

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