Statutory university functions and GST: affiliation and no-objection certificate fees were treated as non-taxable receipts.

Affiliation fees and no-objection certificate fees collected by State universities for compulsory statutory functions do not constitute taxable supplies under GST. The universities were treated as separate statutory entities, but their grant of affiliation and issuance of no-objection certificates was characterised as statutory compliance rather than voluntary commercial activity. Reading the charging provisions with the inclusive definition of business, the analysis concluded that taxable supply ordinarily requires an activity in the course of or in furtherance of business, which was absent here. On that basis, the receipts were not exigible to tax, the exemption question became unnecessary, and the assessment orders demanding GST on the impugned fees were set aside.

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Issues: Whether affiliation fees and no-objection certificate fees collected by State universities in discharge of statutory functions constitute taxable supplies under the GST law.

Analysis: The universities are separate statutory entities created under State enactments and are neither the Central Government, the State Government, nor a local authority. The charging provisions and the inclusive definition of business were read together to hold that a taxable supply under the GST law ordinarily requires an activity in the course of or in furtherance of business, while statutory activities performed under a mandate are not business activities. The grant of affiliation and issuance of no-objection certificates were found to be compulsory statutory functions, not voluntary commercial operations. On that basis, the receipts in question were held not to amount to supply of services exigible to tax. In view of that conclusion, the question of exemption under the notifications did not require determination.

Conclusion: The fees collected for affiliation and no-objection certificates are not taxable under GST and the challenge succeeds in favour of the universities.

Final Conclusion: The assessment orders demanding GST on the impugned university fees were set aside, and the writ petitions were allowed.

Ratio Decidendi: A statutory activity performed by a university under compulsion of law, and not in the course or furtherance of business, does not constitute a taxable supply under the GST law.

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