TaxTMI 
TaxTMI 
2025 (4) TMI 1056
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....ent no. 1 heard the show cause notice and passed order in original under Section 74 of the GST Act dated 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 Univ....
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....er miscellaneous income collected during the period from July 2017 to March 2024. The University submitted all the 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 call....
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....n would amount to supply without clarifying as to how the same would be supply of service. The circulars which are contrary to 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 Shiksha....
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....y opposing the petition invited our attention to the detailed affidavit in reply filed on behalf of the respondent no. 1 to submit that the petition is not maintainable as in the garb of challenging the impugned circulars, the petitioner is challenging the validity and legality of the impugned show cause notice 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 da....
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....xemption has been provided by the Act to exempt certain educational services from levy of GST and hence the decisions are not relevant in the contextual facts. The affiliation to operate universities/boards is granted against the applications made by the institutions. The amount paid for the affiliation is the consideration 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 ur....
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..... The GST is being levied with concurrent jurisdiction of the Centre and the States on the supply of goods or services or both. GST is a destination-based value added tax on supply of goods or services or both which has come into force in India from 01/07/2017. GST is based on fundamental principle of consumption-based tax. In other words, tax shall accrue to the 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 th....
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...., the expression "supply" includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange. licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business; (aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration. Explanation. 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 consti....
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....tegories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through 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....
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....racter of students by formal schooling. 30. In T.M.A. Pai Foundation v. State of Karnataka (supra), Their Lordships observed that education plays a cardinal role in transforming a society into a civilised nation. It accelerates the progress of the country in every sphere of national activity. No section of the citizens can be ignored or left behind because it would hamper the progress of the country as a whole. It is the duty of the State to do all it could, to educate every section of citizens who need a helping hand in marching ahead along with others. 31. In P.A. Inamdar v. State of Maharashtra (2005) 6 SCC 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....
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....tion conducted by the Education Boards were exempted from service tax, held that conducting of examinations are indispensable part of education process. The University confers degrees/diplomas etc. after holding examinations. Unless a student holds a certificate or degree issued by a Board/University, his or her school education would not be complete, similarly, without a degree or diploma being conferred by the University, college education would not be complete. Therefore, examinations are an indispensable component of education, without which such education is incomplete. Therefore, to say that Boards/Universities are not "educational institutions" would amount 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 ....
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....odies set up under specific laws (whether by States or the Centre) would, therefore, not mean that the amounts are "fee" or "cess" to provide some commercial or business service. In each case, at the same time, the mere nomenclature of the consideration being a "fee" or "cess", is not conclusive. If the fee or cess, or other consideration is to provide an essential service, in larger public interest, such as water cess or sewage cess or fee, such consideration, received by a statutory body, would not be considered "trade, commerce or business" or service in relation to those. Non-statutory bodies, on the other hand, which may mimic regulatory or development bodies such as 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 exchan....
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....Tax on the income accruing to the University on account of affiliation during the academic year between 2012-13 and 2016-17. The periodicity of collection of affiliation related fees pales into insignificance." 38. In the context of the present case, it needs to be noted that the affiliation fee is collected while discharging the statutory functions under the Goa University Act, 1984. It is relevant to refer to some of the provisions of the Goa University Act, 1984 and the rules made thereunder relating to affiliation. Section 2 (2) provides that "affiliated college" means a college recognised by the University as such in accordance with the provisions of the Act and the Statutes 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 an....
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.... bodies or institutions is for achieving public functions or services. Such amounts are excluded from the mischief of commercial receipts. 42. This Court in Commissioner of Central Excise, Nasik vs Maharashtra Industrial Development Corporation 2018 (9) GSTL 372 (Bom), while examining the levy of service tax on the maintenance activities undertaken by the corporation, held that Maharashtra Industrial Development Corporation is a statutory corporation which is virtually a wing of the State Government, and it discharges several sovereign functions. It was held that for providing amenities to plot holders the service fees or charges collected by the Corporation are obviously in the nature of 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 d....
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....ded further that nothing contained in sub-item (v) of item (b) shall apply to an institution providing services by way of, (i) pre-school education and education up to higher secondary school or equivalent; or (ii) education as a part of an approved vocational education course. Nil Nil 45. We thus find that the said entry firstly provides that the service provided by an educational institution to its students, faculty and staff are exempted and secondly, services provided by third parties to an educational institution relating to the matters specified therein are exempted from fees. 46. We are in respectful agreement with the view of the High Court of Karnataka in Rajiv Gandhi University of Health Sciences (supra) where it is held that University which grants 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 tha....
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....tution. Based on the recommendations of the 54th GST Council meeting, the Respondent No. 2, vide paragraph 2 of the Circular dated 11/10/2024, clarified that affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions. 50. We are of the opinion that so far as the University is concerned, these clarifications are contrary to the statutory provisions of Sections 7 and 9 of the GST Legislations in as much as the said Circular assumes that the said activity of affiliation service provided by the University to their constituent colleges would qualify as supply. 51. The Supreme Court in CCE Vs. Ratan Melting and Wire Industries, 2008 (231) E.L.T. 22 (S.C) held that the clarifications which are contrary 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....
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.... 2, does not notice the existence of the exemption under clause (a) of entry 66 of the exemption notification no. 12/2017 in so far as it relates to demanding GST on affiliation fees. The university is also an educational institution and students of the university, include students studying through affiliated colleges. Thus, the activities of the university, in so far as it relates to levying of affiliation fees is exempt from GST. The Circular dated 11.10.2024 in its application to the Goa University where it is clarified that the affiliation services by universities to colleges are not by way of services related to the admission of students to such colleges or the conduct of examinations by such colleges, is erroneous. 55. The Hon'ble Supreme Court in Bhartia Education Society v. State of H.P., (2011) 4 SCC 527, in the context 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 Su....
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....on the decision of the Supreme Court in Girdhari Lal Nannelal Vs Commissioner of Sales Tax (1976) 3 SCC 701 (Para 7), Haleema Zubair Vs State of Kerala 2009 (13) STR 113 (SC) (Para 22) and P.C. Ittymathew & Sons Vs Deputy Commissioner of Sales Tax (2000) 9 SCC 318 in support of our observations. 58. The petitioner University has reported income in the income and expenditure account and its schedules and sub-schedules have been listed and the GST is demanded on the same without establishing as to how these incomes would be liable to GST. The GST is proposed on the sale of prospectus, sale of old newspaper, various fees towards sports, eligibility certificate, migration certificate, admission fee etc., received from students are also taken for the purpose of demand. Further, demand of tax is also proposed on interest income earned by the 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 transactio....