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2025 Supreme(Online)(Kar) 32992
KARNATAKA HIGH COURT
S.R.KRISHNA KUMAR, J
M/S BENGALURU NORTH UNIVERSITY – Appellant
Versus
JOINT COMMISSIONER OF CENTRAL TAX – Respondent
WP No. 4254 of 2024 | WP No. 26064 of 2023 | WP No. 26067 of 2023
For the Appellants/Petitioners:SRI. V. RAGHURAMAN, SENIOR ADVOCATE, SRI. RAGHAVENDRA.C.R
For the Respondents:SRI. ARAVIND V CHAVAN, ADVOCATE, SMT. JYOTHI.M.MARADI, HCGP, SRI. JEEVAN.J. NEERALAGI, ADVOCATE
The court held that fees collected by educational institutions from students and affiliated colleges are exempt from GST as these functions are statutory in nature and not commercial.
Headnote:(A) Constitution of India - Articles 226 and 227 - GST Act - Exemption for educational institutions - Petitioners challenged GST demand on affiliation and other fees collected, arguing these fees are statutory/regulatory and not commercial - Court found the activities of the Universities not commercial and hence, exempt under Entry No. 66 of Notification No. 12/2017-CT(R) dated 28.06.2017. (Paras 8, 16.2, 18.1)
(B) Legal validity of Circulars - Circulars that contradict statutory provisions are invalid - Specific circulars clarifying GST applicability on affiliation services were ruled contrary to law. (Paras 50-54)
Facts of the case:
The petitions filed by three Universities challenging GST demand notices, asserting that fees for affiliation and services provided are exempt, being statutory in nature.
Findings of Court:
The Court held that the Universities’ activities comply with statutory functions and are exempt from GST responsibilities, rendering the demand notices and related circulars invalid.
Issues: Whether Universities' activities are commercial or statutory, and whether GST applies to affiliation receipts.
Ratio Decidendi: Universities’ functions do not qualify as commercial activity or business as defined in GST law; thus, fees collected are not considered taxable.
Result: Petitions allowed; GST demands quashed.
| Table of Content |
|---|
| 1. background on gst demands on universities. (Para 3 , 4 , 5) |
| 2. arguments regarding the legality of gst on universities. (Para 6 , 7 , 8 , 10) |
| 3. court's analysis of the statutory nature of university fees. (Para 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18) |
| 4. final conclusion on the invalidity of gst circulars. (Para 19) |
ORAL ORDER
In W.P.No.4254/2024, petitioner seeks for the following reliefs:
“A) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice bearing number C.C.No. GEXCOM/AR/INV/ GST/2163/2022-AF-O/O Pr.CGST-Bengaluru(E) SCN NO. 05/2023-24/jc/ae/gst dated: 10.10.2023 issued by the Respondent, enclosed as Annexure-A for the reasons stated in the grounds.
B) ISSUE a writ of certiorari or writ in the nature of certiorari or any other writ, order or direction calling for the records of the Circular NO. 151/07/2021- GST dated: 17.06.2021 issued by Respondent No.2, enclosed as Annexure-L and quash the clarifications relating to affiliation fee more particularly paragraph 4, along with consequential relief and pass any other writ, order or direction as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and in the interest of justice and equity.
C) That this Hon’ble Court be pleased to issue a writ of Mandamus or Certiorari , or Writ in the nature of Mandamus or Certiorari, or any other Writ or Order or Direction calling for the records of the Circular 234/28/2024-GST dated: 11.10.2024, issued by the Respondent No.2 enclosed as Annexure-M and quash the clarifications relating to affiliation fee more particularly paragraph 2, along with consequential relief and pass any other writ, order or direction as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and in the interest of justice and equity.
D) That this Hon’ble Court be pleased to issue a Writ of Mandamus or Certiorari, or writ in the nature of Mandamus or Certiorari, or any other Writ or order or Direction calling for the records of the Press note dated: 09.09.2024 enclosed as Annexure-N and quash at the recommendation relating to the affiliation fees more particularly para 6(ii) of the Press note along with consequential relief and pass any other writ, order or direction as this Hon’ble Court may deem fit and proper in the facts and circumstances of the case and in the interest of justice and equity.
E) Grant such other consequential reliefs as this Honourable High Court may think fit including refund of amounts paid, if any and the cost of this writ, petition.”
In W.P.No.26064/2023, petitioner seeks for the following reliefs:
“(A) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated: 27.09.2023 bearing No.ADCOM/ENF/SZ/ACCT- 08/INS.02/2022-23 for the period 2017-18 and 2018-19 issued by the 1st Respondent enclosed as Annexure-A, for the reasons stated in the grounds.
(B) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated: 27.09.2025 bearing No. DGSTO-03/DC-3.7/SCN- 01/ADJ-55/2023-2024 along with Summary of show Cause Notice in FORM GST DRC-01 for the period 2017-18, issued by the 2nd respondent enclosed as Annexure-B, for the reasons in the grounds.
(C) Issue a writ of certiorari or any other writ or direction or order to quash the impugned show cause notice dated: 17.10.2023 bearing No. DGSTO-03/DC- 3.7/SCN01/Adj-56/2023-24 along with Summary of Show cause Notice in FORM GST DRC-01 for the period 2018-19, issued by the 2nd respondent enclosed as Annexure-B1, for the reasons stated in the grounds.
(D) Issue a writ of certiorari or any other writ or direction or order to quash impugned show cause notice dated: 17.10.2023 bearing No. DGSTO-03/DC-3.7/SCN- 01/Adj-57/2023-24 along with Summary of Show Cause Notice in FORM GST DRC-01 for the period 2019-20, issued by the 2nd respondent enclosed as Annexure-B2, for the reasons stated in the grounds.
