TaxTMI 
TaxTMI 
2025 (4) TMI 1056
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....ted 28.01.2025 which is also impugned pursuant to an amendment to this petition. The petitioner is also challenging the validity and legality of the Circular dated 17.02.2021 and paragraph 2 of the Circular dated 11.10.2021, both circulars issued by the respondent no. 2 - Central Board of Indirect Taxes and Customs. The petitioner is also challenging the legality of paragraph 6 (ii) of the Press Note dated 09.09.2024 issued to summarize recommendations made in the 54th meeting of the GST Council. 2. No doubt, the petitioner has a remedy to challenge order in original as is the objection of the learned counsel for the respondents. However, we are examining this petition in the context of absence of jurisdictional facts to issue the impugned show cause notice. If we hold against the petitioner on this aspect, then obviously the petitioner has to avail of the remedy provided under the Central Goods and Service Tax Act, 2017 (GST Act for short) to challenge the order in original. The facts relevant to a decision in this writ petition are as under :- 3. The petitioner - Goa University is a University established under the Goa University Act, 1984 (University Act for short). The Unive....
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....e relevant details about the amount of affiliation fees collected from the various colleges affiliated to it and also submitted that there was no miscellaneous income collected to the affiliation fees collected. 7. The Assistant Commissioner of CGST, Goa, issued the intimation of tax in form DRC-01A under section 74 (5) of CGST Act dated 27.05.2024 for the period 2017-2024 demanding the GST payable on affiliation services amounting to Rs. 1,90,30,494 (Rupees One Crore Ninety Lakh Thirty Thousand Four Hundred Ninety-Four Only) along with the applicable interest and penalty. The University vide letter dated 10.06.2024 replied to the demand, denying the tax demand as the demand is based on the exempted supplies. 8. The University was asked to submit the financial documents and provide explanation vide letter dated 22.07.2024. The University vide email dated 30.07.2024 furnished the financial documents/details as requested by the office of the Superintendent of CGST, Goa. 9. The respondent no. 1 by the impugned show cause notice under Section 74 of the CGST Act called upon the University as to why GST of Rs. 4,83,59,747/- (Rupees Four Crore Eighty-Three Lakh Fifty-Nine Thousand Seve....
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....o statutory provisions have no existence. The impugned circulars restrict the scope of exemption notification. The levy of GST on affiliation fees, convocation fees and other fees through such impugned circulars is impermissible. The power to issue orders, instructions or directions is vested exclusively in the Central Board of Indirect Taxes and Customs (CBIC). Therefore, the circulars issued are without any authority of law. Under the provisions of service tax, the demands are dropped. The Respondents could not have then re-opened the issue as all relevant facts were in the knowledge of the authorities. 12. Learned Senior Advocate relied upon the following decisions in support of his submissions: (1) All India Federation of Tax Practitioners v/s. Union of India - 2007(7) STR 625. (2) Union of India v/s. VKC Footsteps India (P) Ltd. - 2021 130 taxmann.com 193 (SC). (3) Central Electricity Regulatory Commission, Delhi Electricity Regulation Commission v/s. ADGGI & Another - 2025 (1) TMI 887. (4) Sole Trustee, Lok Shikshana Trust v/s. CIT - (1976) 1 SCC 254. (5) T.M.A. Pai Foundation v/s. State of Karnataka - (2002) 8 SCC 481. (6) Unni Krishnan, J.P. v/s. State of A.P. ....
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....only to derail and delay the adjudication. 14. Our attention is invited to the relevant provisions of the GST Act viz. Sections 2 (53), 2(36), 7, 8, 15, 22 and the relevant extract-Clause 5 of Schedule II. The Notification No. 12/2017 dated 28.06.2017 issued under the provisions of GST Act, 2017, emphatically holds education service as one which is liable to tax. The relaxation granted vide Notification No. 12/2017 is confined to the services rendered by the educational institutions to the students, faculty and staff. It also grants exemption as regards collection of fees for entrance examination and other fees chargeable from the students for admission or any such purposes. Nowhere the respondents have declared or notified that charging of inspection fees and the affiliation fees by the petitioner would fall within the exempted category. The fact that the Notification dated 28.06.2017 has a broader subject when it prescribes education services, which stood amended further vide Notification No. 2 of 2018, clearly enumerates the specific nature of service rendered by the educational institutions which would stand exempted. The inspection and affiliation fees are not reflected in th....
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....ration for the service by the University by way of assignment of the fee. Reliance is placed on the decision in Builder's Association of India in its order dated 28.03.2018 to contend that only those transactions or activities of Government or statutory authorities could be exempted which are specifically notified to be so. Reliance is also placed on the decision in Agricultural Market Committee v/s. Ashok Hari Kunj - AIR 2000 SC 3116 and N. Nagendra Rao and Co. v/s. State of Andhra Pradesh - (1994) 6 SCC 205, in support of her submissions. 17. The Circulars dated 17.06.2021 and 11.10.2024 merely clarifies the service provided by the Government and it cannot be by any stretch of imagination be stated that GST is being imposed on affiliation fee by the Circulars dated 17.06.2021 and 11.10.2024 not in accordance with the provisions of CGST Act 2017. It is therefore urged that the activity of the University of granting affiliation to various universities/colleges/schools against consideration in the form of affiliation fee or in any other form is a supply of service and taxable under CGST Act. Learned counsel submitted that it is a well settled principle of law that the fundamental p....
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....e jurisdiction where consumption takes place. 22. According to the Petitioner University, whether at all the University was providing a taxable service (or not) under the provisions of the Central Goods and Services Tax Act, 2017 (CGST Act)/ Goa Goods and Services Tax Act, 2017 (GGST Act) so as to empower the Respondents to issue the Impugned show cause notice, is one of jurisdictional fact. 23. Thus, the question in the present case is whether the show cause notice is issued on an assumed jurisdiction (where none actually existed) as to taxability of the activities of a university and the said show cause notice is completely contrary to statutory prescription, in which case this Court would be competent to interfere in the exercise of its jurisdiction under Article 226 of the Constitution. 24. It is well settled that the authority to act depends on the existence of jurisdictional fact. A jurisdictional fact is a fact which must exist before a Court, Tribunal or an authority assuming jurisdiction over a particular matter. If an authority wrongly assumes the existence of such fact, the order could be questioned under Article 226 of the Constitution. Section 9 of CGST Act, 2017/GG....
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....planation. For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another,] (b) import of services for a consideration whether or not in the course or furtherance of business; and (c) the activities specified in Schedule 1, made or agreed to be made without a consideration (d) [***] (1A) Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II. (2) Notwithstanding anything contained in sub-section (1), - (a) activities or transactions specified in Schedule III; or (b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the....
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....it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services: Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax." 26. The Petitioner is a State university set up under the Goa University Act, 1984 enacted by the Legislative Assembly of Goa for the purpose of imparting education for the improvement of social and economic welfare of the people of the State of Goa. Learned Senior Advocate for the petitioner vehemently contended that educational activities cannot be termed as business activities and the amounts received towards affiliation and....
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....C 537, the Hon'ble Supreme Court has held thus: "81. 'Education' according to Chambers Dictionary is 'bringing up or training;... strengthening of the powers of body or mind; culture'. 82. In Advanced Law Lexicon (P. Ramanatha Aiyar, 3rd Edn., 2005, Vol. 2), 'education' is defined in very wide terms. It is stated: 'Education is the bringing up; the process of developing and training the powers and capabilities of human beings. In its broadest sense the word comprehends not merely the instruction received at school, or college but the whole course of training moral, intellectual and physical; is not limited to the ordinary instruction of the child in the pursuits of literature. It also comprehends a proper attention to the moral and religious sentiments of the child. And it is sometimes used as synonymous with "learning". XXXX 84. In 'India-Vision-2020' published by the Planning Commission of India, it is stated (at p. 250): 'Education is an important input both for the growth of the society as well as for the individual. Properly planned educational input can contribute to increase in the gross national products, cultural rich....
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....nt to divorcing examinations from education. Similar was the view taken by the Karnataka High Court in Principle Addl. Directorate General DGGSTI vs. Rajiv Gandhi University of Health Sciences (supra). 35. Let us turn to the present case. The Petitioner University is creature of statute i.e., the Goa University Act, 1984. The Petitioner was established with a purpose of ensuring proper and systematic instruction, teaching, training and research. The fees such as affiliation fees, prospectus fees and migration certificate fees, sports fee etc. received by the Petitioner are per se not commercial in nature. The State has a duty to provide education to the people of India. This duty is being discharged through the University. 36. We have already noticed the requirements of Section 7 of the CGST Act. Section 2 (31) of the CGST Act defines the phrase 'consideration' in terms whereof, the money or money value in respect or in response to the supply would be a consideration. In our opinion, the affiliation is undertaken by the University in terms of the requirement of the statute and in discharge of public functions, the fee so collected for affiliation fails to qualify as '....
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....those which promote trade, for a section of business or industry, or are aimed at providing facilities or amenities to improve efficiencies, or platforms to a segment of business, for fee, whether charged by subscription, or specific fee, etc. may not be charitable; when they claim exemption, their cases would require further scrutiny." 37. The concept of consideration involves an element of contractual relationship wherein the person undertaking the activity of supply does so at the desire of another in exchange of consideration. Essentially there shall involve a quid pro quo. In our opinion, the fee collected for affiliation will not qualify as consideration since neither quid pro quo is involved not it is a contractual obligation. In Principal Addl. Directorate General DGGSTI vs. Rajiv Gandhi University of Health Sciences (supra), the Karnataka High Court in para VIII held thus:- "Affiliation creates a kind of umbilical chord between affiliating body and the affiliated entity. Section 2(a) of RGUHS Act, defines 'Affiliated College' to mean a college or institution... affiliated to the University in accordance with the Statutes. It also includes the institutions that a....
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....in which instruction is provided in accordance with the provisions of the Statutes and Ordinances; Section 2 (8) provides that "College" means a college maintained by the University and includes an affiliated College; As per Section 2 (19), 'University' means the Goa University. Section 5 provides for powers and functions of the university. This provision provides for powers to establish and maintain colleges, institutions, halls and hostels, to admit to its privileges, colleges, institutions and halls not maintained by it and to withdraw any of those privileges (sub-section 7); to recognise an institution of higher learning for such purposes as the University may determine and to withdraw such recognition (sub-section 11). 39. Having noticed some of the relevant provisions of the Goa University Act, 1984, it is significant to refer to some of the provisions of the University Grants Commission Act, 1956 ('UGC Act' for short). The UGC Act read with rules and regulations issued thereunder mandates that universities are required to undertake inspection and examination of colleges before grant of affiliation so as to ensure that the colleges fulfil certain set of standards and....
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.... compulsory levy which is used by the Corporation in discharging its statutory obligations and hence they cannot be subjected to service tax. 43. The High Court of Madras in the case of Manonmaniam Sundaranar University v/s. The Joint Director (GST Intelligence), 2021-TIOL-888-HC-MAD-ST, held that the affiliation fees as well as the inspection commission collected by the University are in the nature of statutory levies. It was held that by performing those activities, the Petitioner is only discharging a statutory function and the fees collected by the Petitioner cannot be amenable to levy of Service Tax. We are in agreement with the learned Senior Advocate for the Petitioner when he submits that from a conjoint reading of the relevant statutory provisions and judicial precedents, the fees collected by the Petitioner University are in terms of the statutory mandate to undertake the activities as set out in the Goa University Act towards regulating the activity of colleges affiliated to the university cannot be brought under the GST net. 44. It is next contended by the learned Senior Advocate for the petitioner University that services, if any, provided by the Petitioner Universit....
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....ants affiliation is also an educational institution. The Madras High Court in Madurai Kamaraj University vs Jt. Comm of GST & C.Ex., Madurai [2021 (54) GSTL 385 (Mad.)], held that the word "educational institution", cannot denote only the college affiliated to the university, but it includes the university. We therefore find merit in the submissions of the learned Senior Advocate that even assuming that the affiliation fees collected by the university, is to be regarded as a service, the said services provided by Goa University are covered under the 1st limb of the exemption entry as ultimately the student of an affiliated college has to be regarded as a student of the university which grants him the degree. 47. It is material to note that without the affiliation from the Petitioner University, the constituent colleges are not permitted to admit students for the courses. Further, the examination is conducted by the Goa University which in turn leads to award of degree to the students. Hence the fees which are collected from colleges are clearly covered by the exemption notification. The activity of the Goa University in collecting the affiliation fees is exempt from GST and hence ....
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....ntrary to the statutory provisions have no existence in law to attract levy of GST in terms of section 9, it has to be first established that the activity undertaken by the petitioner University would qualify to be 'supply' in terms of Section 7 of the CGST Act. Imposing levy by way of clarifications in our view is impermissible. Moreover, by the impugned Circular, additional restrictions for availing exemption duty under Entry 66 of the Notification dated 28.06.2017 is enforced and therefore also the clarification which is not in consonance with the statutory provisions and the exemption Notification dated 28.06.2017 cannot be acted upon. By the impugned Circular dated 17.06.2017 it is clarified that - (a) any services provided by examination board by way of conduct of examination for students including entrance examination for admission to education institutions and fees collected thereof shall be exempted from GST; (b) GST is also exempted for input services availed by the education institutions for conducting examination and entrance examinations; (c) However, other services provided by such Boards, namely of providing accreditation to an institution or to a professiona....
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....xt of the NCTE Act, observed that "affiliation" enables and permits an institution to send its students to participate in the public examinations conducted by the examining body and secure the qualification in the nature of degrees, diplomas, certificates, etc. In Principal and others Vs Presiding Officer and Others, (1978) 1 SCC 498, the Hon'ble Supreme Court observed that affiliation is meant to prepare and present students for public examination. In our view, affiliation is essentially an activity relating to admission and examination of students and hence the Circular dated 11.10.2024 in its application to the petitioner University is contrary to the settled legal position. The circular cannot take away the effect of the notification statutorily issued. The Respondents cannot whittle down the exemption notification and restrict the scope of the exemption notification by issuing a circular, whereby a new condition is sought to be incorporated thereby restricting the scope of the exemption. To support this view, we rely on Sandur Micro Circuits Ltd. Vs. CCE, Belgaum, 2008 (229) ELT 641 (SC). Reliance is also placed by learned Senior Advocate on Union Of India V/s. Inter Conti....
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....university. The Petitioner University has also tabulated the details of income which are listed for tax and also provided the reasons why such income cannot be subjected to tax. Learned Senior Advocate for the Petitioner University is justified in contending that where the main activity is not a business then any incidental or ancillary transaction held, would normally amount to business only if an independent intention to carry on business in the incidental or ancillary transaction is established. The burden to prove such intention rests on the Department. Hence, where the main and dominant activity of the University is education, it cannot be termed as business activity to demand tax. We draw support from the decision of the Supreme Court in Commissioner of Sales Tax Vs. Sai Publication Fund, (2002) 4 SCC 57 for the view that we take. 59. Incomes such as rent/license fee received from teachers or staff are clearly exempt from tax being residential in nature and being services rendered to faculty. The interest income is exempt from tax in terms of serial 27 of Notification 12/2017-CT(R) dated 28.06.2017. We find that as regards rent received from third parties towards setting up ....