1. University challenged show cause notice levying GST on affiliation fees charged to constituent colleges under CGST Act. (Para 1 , 2 , 3 , 4 )
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2026 Supreme(Raj) 616
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
ARUN MONGA, YOGENDRA KUMAR PUROHIT, JJ.
Rajasthan Technical University - Petitioner
Versus
Union Of India, Through The Revenue Secretary, Ministry Of Finance – Respondent
D.B. Civil Writ Petition No. 9556 OF 2024
Decided On : 23-02-2026
Advocates Appeared:
For the Petitioner: Mr. Sharad Kothari, Mr. Kalpit Shishodia, Mr. Dinesh Kumar Bishnoi, Mr. Chirag Soni, Mr. Abhimanyu Yadhuvanshi, Mr. Bhuwaneshwar 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: 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
For the Petitioner: Mr. Sharad Kothari, Mr. Kalpit Shishodia, Mr. Dinesh Kumar Bishnoi, Mr. Chirag Soni, Mr. Abhimanyu Yadhuvanshi, Mr. Bhuwaneshwar 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: 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
Grant of affiliation by a university is a statutory regulatory function, not a "supply of service" in the course of business. Affiliation fees are compulsory statutory levies, not "consideration," and are exempt from GST as they are integral to educational services, admissions, and examinations.
Headnote:(A) Central Goods and Services Tax Act, 2017 - Sections 7, 9, 2(17), 2(102) - Notification No. 12/2017-CT (Rate) - Entry 66 - Grant of affiliation by a university to its constituent colleges - Whether constitutes "supply of service" and whether fees are taxable - Affiliation is a statutory and regulatory function and not a "business" as defined under Section 2(17) (Paras 16, 20) - Fee collected is a compulsory statutory levy and not "consideration" under the Act (Paras 19, 41.1).
(B) Interpretation of Section 7(1)(aa) - Requirement of "in the course or furtherance of business" is implicit for activities and transactions mentioned in clause (aa) to attract liability to tax, following a purposive and harmonious construction (Paras 24-26).
(C) Notification No. 12/2017-CT - Entry 66 - Exemptions for educational services must be construed purposively to include activities integrally connected with imparting education, including affiliation, as it is a prerequisite for admission and conduct of examinations (Paras 28, 39).
(D) Affiliation versus Accreditation - Affiliation is a mandatory legal mechanism for academic authorization and degree conferment, whereas accreditation is a process of quality assessment and assurance; the two are conceptually and legally distinct (Paras 33-34).
Facts of the case:
A state university was issued a show cause notice and demanded payment of GST, interest, and penalty on affiliation fees collected from its affiliated colleges for several academic sessions. The university contended that its activities are non-commercial, statutory in nature, and exempt from GST under the provisions relating to educational services.
Findings of Court:
The court found that the grant of affiliation is a regulatory function and not a commercial activity. It held that the fees charged are compulsory statutory levies rather than consideration for a service. Furthermore, it determined that affiliation is an integral part of the educational process, directly relating to admission and examinations, thus falling within the exemption provided under Entry 66 of Notification No. 12/2017-CT.
Issues: (i) Whether grant of affiliation constitutes a “supply of service” under Section 7 of the CGST Act, 2017; (ii) whether affiliation fees are “consideration” for such supply; and (iii) whether such services are exempt under Entry 66 of Notification No. 12/2017-CT.
Ratio Decidendi: The court reasoned that for a supply to be taxable, it must be in the course or furtherance of business, which is absent in statutory regulatory functions like affiliation. Lacking quid pro quo, affiliation fees are not "consideration." A purposive interpretation of educational exemptions must cover the institutional framework that enables education, including affiliation, as it is the foundation for admissions and the conferment of degrees.
Result: Writ petitions allowed; show cause notice quashed; and refund of GST paid ordered.
Act Referred
Legal Category Hierarchy
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tax law
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goods and services tax
- levy and collection
- statutory interpretation
- service tax
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goods and services tax
- constitutional law
- administrative law
- education law
Table of Contents
2. Petitioner: affiliation is statutory regulatory function, not business, and exempt. Respondent: affiliation is taxable supply of service not covered by exemption. (Para 5 , 6 , 7 , 8 , 9 , 10 , 11 , 12 , 13 )
3. Affiliation is integral, non-commercial statutory function enabling education; fees are statutory levies, not consideration. Exemption Entry 66 covers affiliation. Circulars cannot override. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 44 , 45 , 46 )
4. Grant of affiliation by university is not supply of service and affiliation fees are not consideration; even if service, exempt under Entry 66 Notification. (Para 43 , 47 )
5. Writ petitions allowed; show cause notice quashed; GST levy on affiliation fees unsustainable; refund with interest directed. (Para 47 )
6. Does grant of affiliation by a university constitute a supply of service under Section 7 of CGST Act?
No. Affiliation is a statutory and regulatory function, not undertaken in course or furtherance of business. Applying ejusdem generis, it is not trade or commerce, hence not supply. (Para 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 42 )
7. Are affiliation fees consideration for a taxable activity?
No. Affiliation fees are compulsory statutory levies, non-negotiable, without quid pro quo, hence not consideration under Section 2(31). (Para 19 , 41 , 42 )
8. Is affiliation fee exempt under Entry 66 of Notification No. 12/2017-CT (Rate)?
Yes. Affiliation is inseparable from admission, examination, and degree conferral, falling within Entry 66(a) and 66(b)(iv) as services relating to admission or examination. (Para 29 , 30 , 39 , 41 , 42 , 44 , 45 , 46 )
9. Can CBIC circulars override statutory exemption notifications?
No. Circulars and executive clarifications cannot override statutory provisions or exemption notifications; levy based on such circulars is without authority of law. (Para 31 , 42 )
10. Is accreditation distinguishable from affiliation for GST purposes?
Yes. Affiliation is mandatory, legal, academic authorization; accreditation is quality assurance by external bodies. Affiliation is essential for operating and integral to education, thus exempt. (Para 33 , 34 , 35 )
ORDER :
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 14, 19(1)(g), 265 and 300A of the Constitution of India. More of it later.
2.1. The controversy that warrants adjudication by court is whether or not the affiliation fee charged by a University, for grant of affiliation to its constituent college, is subject to levy of service Tax under CGST Act.
2.2 Bunch of petitions have been filed as per Appendix ‘A’ wherein similar controversy is involved and vide this common order and judgment all of those are being decided together.
FACTS (For convenience and brevity facts are taken from D.B. Civil Writ Petition No.9556/2024).
3. The Petitioner University has been set up by way of State legislative enactment i.e. the Rajasthan Technical University Act, 2006 (RTU Act). Under Section 5(xix) of the RTU Act and the Affiliation Regulations, 2016, it is empowered to fix and recover affiliation and related fees.
3.1. It is an affiliating university offering undergraduate (B.Tech., B.Arch., BHMCT) and postgraduate (M.Tech., MBA, MCA) educational programs being imparted in its more than 140 colleges and catering to more than 40,000 students. University is statutorily mandated to perform academic and regulatory functions qua its affiliated colleges which include curriculum design, inspections, maintenance of academic standards, degree conferment, scholarship facilitation, and grievance redressal.
3.2. Under the erstwhile Chapter V of the Finance Act, 1994 ("FA 1994"), service tax was levied by the Central Government on various services provided within the territory of India. That Section 66B of the FA 1994 (i.e., the charging section) provided that the services enumerated in the negative list under Section 66D were not chargeable to service tax. Further, Clause (1) of Section 66D of the FA 1994 provided that services by way of "pre- school education and education up to higher secondary school or equivalenť"; "education as a part of a curriculum for obtaining a qualification recognized by any law for the time being in force"; "education as a part of an approved vocational education course" were not chargeable to service tax.
3.3. Further, Central Government also issued Notification No. 25/2012-Service Tax dated 20.06.2012 whereby several services were made exempt from payment of service tax. Serial no. 9 of the said notification pertained to educational services wherein also services provided by educational 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
