TaxTMI 
TaxTMI 
2026 (4) TMI 1641
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....Singh Sisodia, Mr. C.S. Kotwani with, Mr. Avdesh Parashar, Mr. Ankur Mathur, Mr. Divik Mathur, Mr. Rahul Lakhwani, Ms. Adwaita Sharma, Mr. Chayan Bothra, Mr. Vinay Kothari with, Mr. Bhavyadeep Singh For the Respondent(s): Mr. Mahaveer Bishnoi, AAG with, Mr. Harshwardhan Singh, Mr. Mrigraj Singh Rathore, Mr. Rajvendra Saraswat with, Mr. Jitesh Kumar Suthar, Mr. Rajeev Purohit, Ms. Akshiti Singhvi. JUDGMENT PER BY THE COURT (PER, ARUN MONGA, J):- 1. Rajasthan Technical University, a State university set up by Government of Rajasthan, is before this court, aggrieved against the impugned Show Cause Notice dated 26.12.2023 and; consequential proceedings vide which the act of affiliation granted by it to the affiliate colleges has been included in the statutory term "service" and; thus tax has been imposed on the University under the provisions of CGST, 2017 and directed to pay service tax with interest and penalty. 2. Case of the Petitioner University is that the impugned Show Cause Notice has been issued in contravention of the provisions of the Central Goods and Services Tax, 2017 (CGST Act). and Rules framed there under. It is also arbitrary and violative of Articles 1....
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....al institutions were made exempt from payment of service tax. 3.4. However, there was a regime change of in direct taxation on the enactment of CGST Act, 2017. 3.5 The Central Government vide Notification No. 02/2018- CT (Rate) dated 25.01.2018 amended serial no. 66 of the Notification dated 28.06.2017. Vide the amended entry it was made clear that Services provided by an educational institution to its students, faculty and staff and by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee are exempted from levy of tax. 3.6 Therefore, even in the current service tax regime, the petitioner-University was/is of the understanding that since their services were related to education, therefore the same were exempt from payment of service tax. In fact, none of the other universities charged any service tax on the affiliation fees amount. Accordingly, the Petitioner also did not collect any service tax on the affiliation fees and even the service tax department never raised any demand. 3.7. Until year 2022 and even prior thereto, there was no demand ever raised on the petitioner University for payment of service ....
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....ereby a demand was raised with respect to the payment of penalty under section 74(5) of the CGST/RGST Act, even after petitioner having duly paid the GST amount along with the applicable interest rate. 3.14. In response to the letter dated 27.06.2023, the Petitioner University, vide its letter dated 20.09.2023, submitted that the Petitioner University was not aware that GST was applicable on affiliation fees and other related charges collected by it from its affiliated colleges and was under the bona fide belief that like the erstwhile Indirect Tax regime, affiliation services, being an integral part of educational services, were exempted under the GST regime as well. 3.15 Notwithstanding, the respondents issued the impugned show cause notice dated 26.12.2023 under section 74 of the CGST, Act alleging suppression of returns, non issuance of invoices and willful evasion of tax even though petitioner had made full payment of tax with interest. 3.16. Petitioner University requested vide its letter dated 25.01.2024 that its case should be considered under the provisions of Section 73(5) of the CGST/RGST Act and accordingly the penalty must be waived off as the tax liability al....
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....person and the supply of activities or transactions inter se shall be deemed to take place from such one person to another; (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration. [****] [*****] (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 recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services. xxxx xxxxx xxxx Schedule I, II, and III referred to in the aforesaid provisions are not being referred or reproduced for sake of br....
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....been accepted by him in the course or furtherance of his trade, profession or vocation; (h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities." 4.6. The word 'service' is defined in section 2 (102) of the Act as under: "Section 2: In this Act, unless the context otherwise requires. ---- xxxx xxxx xxxx (102) -"services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Explanation.-- For the removal of doubts, it is hereby clarified that the expression -services‖ includes facilitating or arranging transactions in securities;" 4.7. The relevant of the statutory Notification No. 12/2017, dated 28.06.2017, issued by the Central Government, exe....
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.... (ii) education as a part of an approved vocational education course. SUBMISSIONS ON BEHALF OF THE PETITIONER/UNIVERSITY. 5. The activity of the Petitioner University does not fall under the scope of supply under section 7 of the CGST/SGST Act. 5.1 The petitioner, being a university established under a State Act, does not qualify as "Government" or a "local authority"; therefore, Section 2(17)(i) of the CGST Act, 2017 is inapplicable. Further, its activities do not fall within the definition of "business" under Section 2(17)(a)-(c). The petitioner's educational activities are non-commercial and do not constitute a "supply of services" under GST. Imparting education cannot be regarded as "business" under Section 2(17), as it does not involve trade, commerce, manufacture, profession, vocation, or any similar commercial pursuit. 5.2 The phrase "any other similar activity" is grammatically linked only to "wager," as indicated by the punctuation, and not to the preceding terms. Section 2(17) defines "business" to include trade, commerce, manufacture, profession, vocation, adventure, wager, or similar activities, irrespective of pecuniary gain. Educ....
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....the form of entrance fee; (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or house- keeping services performed in such educational institution; (iv) services relating to admission to, or conduct of examination by, such institution; (v) supply of online educational journals or periodicals: Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b)] shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent: Provided 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." 7.2 Clause (a) of Entry 66. Entry 66 exempts (i) services provided by an....
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....e to GST. 7.5 The Supreme Court and various High Courts, as held in the Goa University vs. Joint Commissioner of Central Goods and Services Tax 2025 SCC OnLine Bom 1262. and Bengaluru North University vs. Joint Commissioner of Central Tax, GST Commissionerate. WP No.5205/2024 Karnataka High Court, have consistently adopted a broad interpretation of "education," drawing ratio inter alia from Sole Trustee, Lok Shikshana Trust v. CIT. (1976) 1 SCC 254 and T.M.A. Pai Foundation v. State of Karnataka (2002) 8 SCC 481. It has been held that "education" encompasses activities relating to imparting, regulating, and controlling education, including affiliation, which is a prerequisite for admissions and examinations under the university framework and operates for the benefit of students of affiliated colleges as university students. Relevant authorities are compiled at serial nos. 24 to 30 of the case/provision compilation. 8. CBIC Circulars Ultra Vires 8.1 CBIC - Tax Research Unit (TRU) has no statutory authority to issue directions that effectively modify the CGST Act or confer binding force on GST Council recommendations, which by themselves do not have statutory effect; any suc....
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....from affiliated colleges; tax and interest were discharged from the Petitioner's own funds. 9.4 These facts demonstrate bona fide conduct and negate any intent to evade tax. Accordingly, invocation of Section 74 is without jurisdiction, and the impugned SCN and demand are liable to be set aside for failure to establish the statutory conditions. 9.5 The Petitioner, a statutory university established under the Rajasthan Technical University Act, 2006 to advance technical education and public objectives, functions as an instrumentality of the State. It is inherently implausible that such a body would deliberately evade tax, particularly where doing so would undermine public revenue-reinforcing the absence of mens rea. 10. Even arguendo if GST is leviable the affiliated/constituent colleges are liable to pay the GST along with interest and penalty. 10.1 The University has deposited the GST and applicable interest pursuant to demands raised by the GST Department; any recovery from constituent colleges is consequential and not arbitrary. As a State-run institution, the University acts in discharge of public functions and in compliance with governmental directions. 10.2 By ....
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....d services provided by educational institutions to students, faculty, and staff, and certain services provided to educational institutions (such as transportation, catering, security, housekeeping, admission, examination, and supply of journals). Affiliation services are not included in the exempted categories and hence remain taxable. 12.2 The exemption framework by Notification, limits exemptions for higher educational institutions to specific entries-namely clauses (a), (aa), and sub-items (iv) and (v) of clause (b) under Serial No. 66-none of which cover affiliation. 12.3 The GST Council, after deliberation, chose to exempt services directly connected with students (e.g., transport, catering, admission, examinations). Services relating to recognition or regulatory oversight of colleges, such as affiliation, were not exempted. Entry 66(b)(iv) specifically covers services relating to admission or conduct of examinations, not affiliation. 12.4 Under Section 2(102) of the CGST Act, "services" include any activity other than goods, money, or securities. Grant of affiliation for consideration qualifies as a supply of service classifiable under Heading 9992 (Education Service....
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....is exempt under Entry 66 of Notification No. 12/2017-CT (Rate)? (iv) Whether levy of GST on affiliation fees is legally sustainable? DISCUSSION AND ANALYSIS 16. Affiliation to the University is the sine qua non for the Colleges to admit the students to University classes, impart education to them, and the taking of the examinations and obtaining of University degrees by the students. Affiliation is thus an essential and integral part of imparting of education. It is not a 'business' as defined in sub-section 17 of section 2 reproduced above. The element of 'in the course or furtherance of business' is the sine-qua non for applicability of sub-clause (a), sub-section (1) of section 7 ibid, which does not exist in the present case. 17. University affiliation is a statutory and regulatory function, intrinsically connected with admission of students, imparting them education, their taking the examination, and conferment of University degrees. Colleges are merely recipient of the affiliation; act as facilitators or extended arms for imparting University education to the students, while the real beneficiaries of affiliation are students, who are ultimately conferred deg....
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....of clause (a) and lead to absurdity. While the categorical mandate of sub-clause (a), sub-section (1) of Section 7 ibid is that, for the purpose of levy of tax, the supply of service must be 'in the course or furtherance of business'. As against this, clause (aa), if read narrowly and in isolation from the aforesaid remaining provisions of Section 7(a) would attract liability for service tax even if the activities and transactions mentioned in clause (aa) are otherwise than 'in the course or furtherance of business'. 24. We are of the considered opinion that a purposive and harmonious construction of these two apparently divergent sub-clauses has to be attempted by adopting the doctrine of ejusdem generis. Accordingly, we now proceed for that exercise. 25. In the 'introduction' to 'statement of objects and reasons' of the Central Goods and Services Tax Bill, culminating into the 2017 Act, it is mentioned that 'the Bill proposes a single tax to be levied on supply of goods and services or both at each stage of supply chain, ranging from manufacture or import to the retail level. It will broaden tax base as well as improve compliance. It provides for anti-profiteering clause to....
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....thin the exemption, supporting a broad reading that encompasses affiliation. Clause (b)(iv) exempts services "relating to admission to, or conduct of examination." Given the wide import of "relating to," affiliation being the foundational requirement for admissions and examinations, the same falls within this ambit. 28.2. Affiliation is a statutory regulatory function to maintain academic standards and integrate colleges into the university system; it is inseparable from the educational process and cannot be treated as an independent commercial supply. The scheme of Entry 66 shows an intent to exempt essential institutional processes that enable education. Excluding affiliation would defeat the purpose of keeping education tax neutral. The provisos do not exclude affiliation, and in the absence of express exclusion, a harmonious and purposive interpretation requires that it be treated as exempt to advance the object of promoting education. Accordingly, it so appears that affiliation services, being integral to admissions, examinations, and conferment of degrees, are covered by Entry 66. 29. Thus we hold that affiliation being inseparably linked to admission of students to cou....
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....ation. 32.1 It was noted by Delhi High Court that screening tests are not conducted as a part of the curriculum; the said tests are also not in the nature of entrance examinations but for the purpose of recognizing primary medical qualifications secured by candidates from institutions abroad; the accreditation fee is charged from medical institutions for accrediting them; these services are not covered under the 2017 notification and that the candidates appearing for the screening tests are not students of the petitioner. There are no such facts and circumstances in the present case. The said judgment is, therefore, not applicable and does not help the respondents in the instant case. 33. Affiliation of a college with a university and accreditation of a college or university are conceptually and legally distinct processes, though both operate within the broader framework of higher education governance. Affiliation refers to a formal and statutory relationship established between a college and a university, whereby the university grants the college the authority to conduct courses of study prescribed by it, admit students to those courses, and present them for university exami....
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.... of affiliation has serious consequences, potentially disabling the college from continuing its academic programmes. 34.4 Accreditation, in contrast, is granted for a fixed cycle and results in a quality grade; failure to secure or maintain accreditation affects credibility and eligibility for certain benefits but does not automatically terminate the institution's operations. 34.5. To sum up, affiliation operates in the domain of legality and academic authorization, establishing the formal link that allows a college to participate in the university's educational system. Accreditation operates in the domain of quality assurance, providing an evaluative judgment on the standards maintained by the institution. While both mechanisms are important for the proper functioning and credibility of higher education institutions, they serve different purposes and are not interchangeable. 35. Our view that affiliation is integral to education and affiliation fee is exempt from tax, is also supported by judgments rendered by other High Courts in:- (i) Madurai Kamaraj University v. Joint Commissioner WP (MD) No.20502/2019, Madras High Court, "19. In this context, sub-cl....
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....University Act, which has been quoted herein above, is to hold examinations and to confer degrees, titles, diplomas, and other academic distinctions. Therefore, holding or conducting an examination is primarily a job of the university, and the colleges affiliated to the university are only facilitators. Therefore, examinations are not conducted directly by the colleges, it is being conducted by the university, but the facilitator is the college. Therefore, the word "conduct of examination by such institution" means conduct of examination by the university and the college and not by the college alone. The examination is the examination of the university, for which facilitation is given by the college, wherein the examinations are conducted and ultimately valuation is to be done by the university and marks are awarded and degree is conferred by the university. Therefore, it is the university where the facilitator is the college, where the examination is being taken place, and therefore the word "conduct of examination" cannot have such a narrow and pedantic interpretation as has been given by the Advance Ruling Authority in their order dated 19.11.2020, which has been, in fact, heavi....
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....ly, connected miscellaneous petitions are closed." (iii) Goa University vs. Joint Commissioner of Central Goods and Services Tax 2025 SCC OnLine Bom 1262. "35. Let us turn to the present case. The Petitioner University is established under a statute, namely the Goa University Act, 1984, with the purpose of ensuring proper and systematic instruction, teaching, training, and research. The fees, such as affiliation fees, prospectus fees, migration certificate fees, sports fees, 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, and 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," whereby money or money value, in respect of or in response to a supply, would qualify as consideration. In our opinion, affiliation is undertaken by the University in terms of statutory requirements and in discharge of public functions; therefore, the fee collected for affiliation fails to qualify as "consideration." The fees collected by the University, i....
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....n Manonmaniam Sundaranar University v. The Joint Director (GST Intelligence), 2021-TIOL-888-HC-MAD-ST, held that affiliation fees, as well as inspection commissions collected by the University, are statutory levies. It was held that, by performing such activities, the Petitioner is only discharging a statutory function and the fees collected are not amenable to Service Tax. From a conjoint reading of the statutory provisions and judicial precedents, the fees collected by the Petitioner University under statutory mandate for regulating affiliated colleges cannot be brought within the GST net. 40. We are in respectful agreement with the Karnataka High Court in Rajiv Gandhi University of Health Sciences (supra), which held that a University granting affiliation is also an educational institution. The Madras High Court in Madurai Kamaraj University v. Jt. Comm of GST & C.Ex., Madurai [(2021) 54 GSTL 385 (Mad.)] held that the term "educational institution" includes not only affiliated colleges but also the University itself. Even assuming that affiliation fees constitute a service, such services would fall within the exemption entry, as students of affiliated colleges are ultim....
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..../2017, dated 28.06.2017, the same being services provided (a) by an educational institution to it's students and (b) to an educational institution by way of ...(iv) services relating to admission to, or conduct of examination by such institution. The preceding words 'relating to' are significant and show that the import of relevant entry is wide and comprehensive and not narrow or restrictive. 39. In Goa University vs. Joint Commissioner (supra), a Division Bench of the Bombay High Court noted 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. It was held that, hence, the fee which are collected from the colleges are clearly covered by the Entry No. 66 of the exemption notification No. 12/2017-CT(R), dated 28.06.2017, and the activity of the Goa University in collecting the affiliation fee is exempt from GST and hence the fees collected by the Goa University is not liable to tax. The situation in the present case is analogous. We are in respectful agreement with the aforesaid ....
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.... of Affiliation is a Supply of Service- Section 7 of the CGST Act contemplates supply only when an activity is carried out in the course or furtherance of business. Grant of affiliation is a statutory function enabling the University to discharge its core mandate of imparting education through affiliated colleges. Applying the doctrine of ejusdem generis to Section 2(17), affiliation cannot be equated with trade, commerce, or any activity of commercial character. Accordingly, we hold that grant of affiliation does not constitute a "supply of service". 42.1. Issue (ii): Whether Affiliation Fees Constitute Consideration- Affiliation is compulsory for colleges; there is no element of choice, bargaining, or reciprocity. The fee is a statutory levy, not a payment for a negotiated service. We thus hold that in absence of quid pro quo, the essential element of "consideration" is missing. 42.2. Issue (iii): Applicability of Exemption under Entry 66. Even assuming affiliation to be a service, it is inseparably connected with: curriculum approval, admission of students, conduct of examinations, and conferment of degrees. Students admitted through affiliated c....
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....s for students of affiliated colleges as an integral step towards conferment of degrees. 46. Consequently, aside all above, for this reason too, the so-called service of affiliation rendered by a university to its affiliated colleges squarely falls within the ambit of exempt services under Entry 66(a) as well as Entry 66(b)(iv). RELIEF 47. D.B. CWP No.9556/2024 and all other writ petitions as per Appendix 'A' are allowed. Proposed levy and demand of GST on affiliation fee is held to be unsustainable in law. Impugned show cause notice dated 26.12.2023 issued by Office of Commissioner, Central Excise & CGST Commissionerate is quashed. It is also directed that subject to the verification that the burden of the GST on affiliation fee has not been fastened / recovered from the students by factoring it in the tuition fee, any amount of GST on affiliation fee already paid by the petitioner shall be refunded within four months, failing which the same shall also attract interest @ 7% per annum from the date of payment till refund. Appendix "A" S.No. Writ Petition Number Case Details Relief Claimed 1. 2906/2022 TRIBAL AREA PRIVATE COLLEGE WELFARE SOCIETY V/S ....
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.... 12. 8830/2023 SWAPOSHIT SHIKSHAK PRASHIKSHAN MAHAVIDYALAY SAMITI MOHANLAL SUKHADIA UNIVERSITY & Ors. QUASHING OF LEVY OF SERVICE TAX BY THE UNIVERSITY PURSUANT TO COMMUNICATION/ LETTER/ NOTICE DATED 30/12/2021. 13. 8839/2023 SORABH AGRICULTURE COLLEGE THE AGRICULTURE UNIVERSITY & Ors. QUASHING OF LEVY OF SERVICE TAX BY THE UNIVERSITY PURSUANT TO COMMUNICATION/ LETTER/ NOTICE DATED 30/12/2021. 14. 8900/2023 SHOURABH COLLEGE OF VETERINARY SCIENCE THE RAJASTHAN UNIVERSITY OF VETERINARY AND ANIMAL SCIENCES & Ors. QUASHING OF LEVY OF SERVICE TAX BY THE UNIVERSITY PURSUANT TO COMMUNICATION/ LETTER/ NOTICE DATED 30/12/2021. 15. 8999/2023 RAJASTHAN COLLEGE OF ANIMAL HUSBANDRY STATE OF RAJASTHAN & Ors. QUASHING OF LEVY OF SERVICE TAX BY THE UNIVERSITY PURSUANT TO COMMUNICATION/ LETTER/ NOTICE DATED 30/12/2021. 16. 10797/2023 NIJI COLLEGE SHIKSHAN SANSTHAN WELFARE SOCIETY THE JAI NARAIN VYAS UNIVERSITY, JODHPUR & Ors. QUASHING OF LEVY OF SERVICE TAX BY THE UNIVERSITY PURSUANT TO COMMUNICATION/ LETTER/ NOTICE DATED 30/12/2021. 17. 3604/2024 SWAIM SEVI SHIKSHNIK SANSTHAN SANRAKSHAN SANSTHA THE STATE OF RAJASTHAN & Ors. QUASH....