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