2026 (2) TMI 722 - HC - GST

GST on university affiliation services: affiliation and inspection are pre-admission services and are taxable under GST.

Affiliation charges levied by a university do not qualify as services 'relating to admission to, or conduct of examination by' an educational institution ... Service of affiliation - exemption for services by educational institutions - services relating to admission to, or conduct of examination by, such institution - interpretation of exemption notification No.12/2017 - clarificatory circular and GST Council recommendation - HELD THAT:- It is undoubtedly clear that the fees collected for affiliation and for inspection of colleges applied for affiliation, fall beyond the scope of service connected with admission of students and conduct of examination. The illustration given by the learned Single Judge in Madurai Kamaraj University's case [2024 (6) TMI 1550 - MADRAS HIGH COURT] that admission of students by affiliating college is controlled by universities while granting affiliation and if the affiliation is granted for admitting 100 students, the College cannot admit even one student more and therefore, the extended meaning should be given to the expression 'service in connection with admission of student', is fallacious. The number of students to be admitted in the affiliated college is determined by the statute namely, the University Act based on availability of necessary infrastructure, such as building, teaching faculty etc.. Admission of students commences only after the affiliation is granted on satisfaction of required infrastructure. Any service provided for granting affiliation is independent of admitting student and conduct of examination. Therefore, extended meaning to the expression 'admission of student or conduct of examination' is impermissible. As a result, we hold that the view expressed in the subsequent judgment namely, Pondichery University's case [2023 (10) TMI 1169 - MADRAS HIGH COURT] declares the correct legal position, since the affiliation fee collected by the Universities does not fall within exemption. Accordingly, the fee collected by the University from the Colleges as affiliation fees is amenable for levy of GST. Thus the order of reference is answered accordingly. The matter is sent back to the learned Single Judge to decide the case on other grounds, if any. Issues: Whether affiliation charges collected by a university from affiliating institutions/colleges are amenable to levy of Goods and Services Tax (GST).Analysis: The Court examined the text and scope of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 which exempts services 'by an educational institution to its students, faculty and staff' and certain services 'to an educational institution' such as services relating to admission to, or conduct of examination by, such institution. The Court considered competing High Court decisions and subsequent administrative clarifications, including Circular No.234/28/2024-GST dated 11.10.2024 and the GST Council recommendation leading to Notification No.08/2024-Central Tax (Rate) dated 08.10.2024. The Court analysed whether the activity of granting affiliation is part of 'services relating to admission to, or conduct of examination by' an educational institution or is a separate pre-admission/inspection activity. The Court also reviewed the statutory definitions of 'services' and the scope of Government's power to grant exemptions under the Central Goods and Services Tax Act, 2017, and considered precedent from other High Courts including Bombay, Telangana and Karnataka decisions distinguishing the nature of affiliation services from admission/examination services.Conclusion: The affiliation fee collected by a university from colleges does not fall within the exemption for services relating to admission to, or conduct of examination by, an educational institution under Notification No.12/2017-Central Tax (Rate). Affiliation and inspection services are separate pre-admission/eligibility activities and are therefore amenable to levy of GST; the view favouring taxability is adopted.