TaxTMI 
TaxTMI 
2026 (4) TMI 1800
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....rvices Tax (CGST) Act, 2017 read with the corresponding provisions of the Maharashtra Goods and Services Tax Act, 2017, and Section 20 of the Integrated Goods and Services Tax (IGST) Act, 2017. Also the penalty equivalent to the said amount under the provisions of Section 74(1) read with Section 122 of the CGST Act has been confirmed against the petitioner by the impugned order. The petitioner has also prayed for other reliefs, which are in relation to setting aside of the rectification order dated 23 June, 2025, as also has prayed for quashing of Circular No. 151/07/2021-GST dated 17 June, 2021 issued by Central Board and Indirect Taxes as also instructions dated 5 October, 2018/22 June, 2020 issued by respondent no. 3. The substantive prayers are prayer clauses (a) to (g) of the petition, which are required to be noted, which read thus: "a) That this Court be pleased to issue writ of certiorari or any other appropriate writ, order or direction to quash the impugned order in original bearing No. 154/ADC/MUMSOUTH/VS/2024-25 dated 27.01.2025, along with the summary order dated 28.01.2025 issued by respondent no. 2, enclosed as "Exhibit-A and A1". b) That this Court....
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.... 5. The petitioner replied to the said show cause notice by its letter dated 28 October, 2024 inter alia contending that it being a statutory University, was engaged in the statutory duties of granting affiliation to colleges and for which it charges affiliation fees to undertake the various obligations under the statute for granting affiliation and for renewal of affiliation being the statutory functions under the provision of Maharashtra Public Universities Act and hence, the petitioner was not liable to pay GST on the affiliation fees so collected. 6. Respondent no. 2 granted a hearing to the petitioner on the show cause notice wherein the petitioner raised all the contentions as set out in the reply to the show cause notice. In pursuance of such hearing, respondent no. 2 passed the impugned order-in-original dated 27 January, 2025, which was for the period 2017-18 till 2022-23 confirming the GST payable on affiliation fees amounting to Rs. 16,90,05,337/- along with applicable interest and penalty. Also, a summary order was issued on the next date, i.e., on 28 January, 2025. Being confronted with such order, the petitioner filed an application for rectification of the impu....
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.... a consideration by a person in the course of furtherance of business, is the only relevant consideration. It is also his submission that the term 'business' defined under Section 2(17) of the CGST Act certainly would not include the nature of activities of the statutory University which is constituted under the act of State Legislature and although governed under the Maharashtra Public Universities Act, 2016, the genesis is found to be in the Bombay Universities Act, 1953 and thereafter Maharashtra Universities Act, 1994. 10. Mr. Raghuraman would submit that the educational activities of a statutory university cannot be termed as business activities and the amounts received by it towards affiliation fees would not fall within the ambit of consideration for the statutory activities of the University and hence not amenable for payment of GST. In such context, it is submitted that commercial activities are required to be interpreted considering the decision of the Supreme Court in All India Federation of Tax Practitioners vs. Union of India 2007 (7) STR 625, namely, commercial activities involving production of goods and provisions of services in the context of GST being destinati....
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....ly clarifies that affiliation services provided by universities to their constituent colleges are not covered within the ambit of exemptions provided to educational institutions. It is submitted that such clarifications are contrary to the provisions of Section 7 and Section 9 of the CGST/MGST Act. It is submitted that considering the settled principles of law, there cannot be any clarifications which are contrary to the statutory provisions and such clarifications would have no valid existence in law. Lastly, it is submitted that the contention which the petitioner is canvassing is no more res integra in view of the decision of the co-ordinate Bench of this Court at Goa in Goa University vs. Joint Commissioner of Central Goods and Services Tax 2025 SCC OnLine Bom 1262. It is submitted that in fact the issue initially had fell for consideration of the High Court of Karnataka in the case of Principal Additional Director General, DGGSTI vs. Rajiv Gandhi University of Health Sciences (2024) 22 Centax 526 (Kar.), which has been followed by the co-ordinate Bench in the case of Goa University (supra). It is submitted that the decision of High Court of Karnataka in Rajiv Gandhi University....
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....n systematic and continuous activities involving collection of fees for affiliation of colleges, which have a direct nexus with the services rendered. Such collection would constitute 'supply' under Section 7 and attracting levy under Section 9. It is, therefore, his submission that clearly jurisdictional facts were available for respondent no. 2 to assume jurisdiction to issue show cause notice. It is also his contention that the Exemption Notification dated 28 June 2017 is required to be read as applicable to the Educational Institutions and not the University and for such reason, the Exemption Notification is of no consequences insofar as the petitioner's case is concerned. It is submitted that reliance placed on the decision of Goa University (supra) is totally misplaced and distinguishable, as the same is based on specific facts and does not lay down a universal proposition. On the principle that taxability under GST is activity-specific and must be independently examined. Reply affidavit has dealt with several contentions as urged in the memo of the petition and para wise, however, the sum and substance in the reply affidavit is that the nature of activity of the petitioner-U....
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....tive Plan (Section 107), Conditions of affiliation and recognition (Section 108), Procedure for permission for opening new college or new course, subject, faculty, division (Section 109), Procedure for affiliation (Section 110), Procedure of recognition of institution (Section 111), Procedure for recognition of private education provider (Section 112), Recognition to empowered autonomous skills development colleges (Section 113), Continuation of affiliation or recognition (Section 114), Extension of affiliation or recognition (Section 115), Permanent affiliation and recognition (Section 116), Inspection of colleges and recognized institutions and report (Section 117), Shifting college location (Section 118), Transfer of management (Section 119), Withdrawal of affiliation or recognition (Section 120), Closure of affiliated college or recognized institutions (Section 121), Autonomous university department or institutions, college or recognized institution (Section 122), Empowered autonomous colleges (Section 123), Empowered autonomous cluster institutions (Section 124). 20. It appears to us that Chapter X insofar as granting of affiliation is concerned, is a code by itself, for wh....
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....sons 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 I, made or agreed to be made without a consideration; (1-A) 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. (3) Subject to the provisions of sub-sections (1), (1-A) and (2)], the Government may, on the recommendations of the Council, specify, by notification, the tra....
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....e 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." 22. On a plain reading of Section 7(1)(a), it is clear that the expression 'supply' in the present context necessarily would include all forms of supply of goods or service 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 of furtherance of business. In our opinion, considering the nature of the statutory activities being undertaken by the University and in relation thereto, collecting of the affilia....
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....n the context of the petitioner University receiving affiliation fee, in our opinion, there ought not to be any ambiguity that the collection of affiliation fees by the petitioner University in the discharge of its statutory functions, as noted hereinabove, can at all amount to a "supply" as defined under Section 7 of the CGST Act. As a consequence thereto, once such activity itself is not 'supply' and/or it is not business within the meaning and purview of sub-section 1(a) of Section 7, there is no question of the charging provision i.e. Section 9 which provides for levy and collection being applicable. As a sequel thereto, once Sections 7 and 9 itself are not applicable, the proper officer would not have jurisdiction to issue show cause notice under section 74 of CGST Act. 25. It is well settled that GST is a destination-based tax. If the said provisions are to be made applicable to affiliation fees, an intention would be required to be gathered that it is its students who may ultimately become liable to bear the brunt of such taxes. This does not appear to be an intention including to consider canvass of the exemption notification dated 28 June 2017, whereby the education act....
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....a High Court, this Court in the very context of the said universities collecting/receiving affiliation fees on which GST was sought to be levied, made the following observations: ""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 at 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 th....
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....adras in 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....
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....atutory 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 colleges are, in law, students of the University. We hold that entry 66 must be interpreted purposively to cover services forming the backbone of educational delivery, including affiliation. 42.3. Issue (iv): Validity of GST Levy :- Circulars or executive clarifications cannot override statutory provisions or exemption notifications. Levy of GST on affiliation fees results in indirect taxation of education, which is Impermissible. We hold that the impugned levy is therefore without authority of law. CONCLUSION 43. As an upshot of the what is reasoned and discussed in the preceding part, it is held that grant of affiliation by a University is a statutory and regulatory function and does not constitute a supply of....
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...., by way of, (i) transportation of students, faculty and staff; (ii) catering, including any midday meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping 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 preschool 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. Nil Nil 45. We thus find that the said entry firstly provides that the service provided by an educational institution to its students, facu....