Goa University's Affiliation Fees Exempt from GST: Bombay High Court Quashes Tax Demand - 2025-04-16

Goa University Wins GST Exemption Battle: High Court Quashes Tax Demand on Affiliation Fees

Panaji, Goa – April 15, 2025 – In a significant victory for Goa University, the Bombay High Court at Goa has quashed a show cause notice demanding Goods and Services Tax (GST) on the university's educational activities, particularly affiliation fees collected from affiliated colleges. Justices M. S. Karnik and Nivedita P. Mehta , presiding over the bench, ruled in favor of the petitioner, Goa University, citing a lack of jurisdictional facts for levying GST on these fees.

Case Background: Show Cause Notice and University Challenge

Goa University, established under the Goa University Act, 1984, filed a writ petition challenging a show cause notice issued by the Joint Commissioner of Central Goods and Service Tax (CGST), Goa Commissionerate. The notice proposed to levy GST on the university's educational activities, specifically the affiliation fees charged to its affiliated colleges. The university also challenged the validity of circulars issued by the Central Board of Indirect Taxes and Customs (CBIC) and a press note from the GST Council, which sought to clarify the taxability of such fees.

Arguments Presented: University vs. GST Authorities

Representing Goa University, Senior Advocate Mr. Raghuraman argued that the university's educational activities are not 'business' under the GST Act and affiliation fees are not 'consideration' for services. He emphasized that the university, as a statutory body, performs public functions, and the fees collected are regulatory and not commercial in nature. Mr. Raghuraman further contended that these activities are exempt under Entry No. 66 of Notiication No. 12/2017-CT (R) dated 28.06.2017, which provides exemptions for services related to education. He cited numerous precedents, including Sole Trustee, Lok Shikshana Trust v/s. CIT and T.M.A. Pai Foundation v/s. State of Karnataka , to support the argument that education is not a commercial activity.

Conversely, Ms. Asha Desai , Senior Standing Counsel for the respondents, argued that the affiliation activity constitutes a taxable 'service' provided by the university. She pointed to circulars issued by the CBIC which clarify that affiliation and accreditation fees are subject to GST. Ms. Desai emphasized that the exemption notification is specific and does not explicitly exempt affiliation fees. She cited decisions like Builder’s Association of India to argue that exemptions must be narrowly construed and specifically notified.

Court's Reasoning: Education is Not Business, Affiliation Fees Not 'Consideration'

The High Court, after considering the arguments and relevant provisions of the CGST Act and Goa University Act, sided with the petitioner. The court highlighted the fundamental principle of GST being a tax on 'commercial activities'. Referencing Laxmi Engineering Works Vs P.S.G. Industrial Institute , the court reiterated that "commercial activity" implies a profit motive, which is absent in the educational activities of a university.

The judgment emphasized that Goa University is a statutory body discharging public functions under the Goa University Act, 1984. The court noted that affiliation is a statutory requirement and the fees collected are in the nature of regulatory fees, not contractual consideration. Quoting from Assistant Commissioner of Income Tax (Exemptions) v/s. Ahmedabad Urban Development Authority , the court observed:

> “Fee, cess and any other consideration" has to receive a purposive interpretation, in the present context. ... regulatory activity, necessitating fee or cess collection in terms of the enacted law, or collection of amounts in furtherance of activities such as education, regulation of profession, etc. are per se not business or commercial in nature.”

The court further relied on the Karnataka High Court's decision in Principal Addl. Directorate General DGGSTI vs. Rajiv Gandhi University of Health Sciences , which held that affiliation fees collected by universities are not 'consideration' in a commercial sense.

Circulars Deemed Contrary to Statute and Exemption Notification

The bench also addressed the circulars relied upon by the GST authorities. It held that these circulars, clarifying that affiliation fees are taxable, are contrary to the statutory provisions of the GST Act and the exemption notification. Citing CCE Vs. Ratan Melting and Wire Industries , the court stated that clarifications cannot override or restrict the scope of statutory provisions or notifications. The court observed:

> “Imposing levy by way of clariications in our view is impermissible. Moreover, by the impugned Circular, additional restrictions for availing exemption duty under Entry 66 of the Notiication dated 28.06.2017 is enforced and therefore also the clariication which is not in consonance with the statutory provisions and the exemption Notiication dated 28.06.2017 cannot be acted upon.”

Exemption Notification Extends to University's Affiliation Services

Finally, the court agreed with the petitioner's argument that even if affiliation fees were considered a service, they would fall under the exemption provided in Entry No. 66 of Notiication No. 12/2017-CT (R). The court concurred with the Madras High Court’s view in Madurai Kamaraj University vs Jt. Comm of GST & C.Ex., Madurai that the term "educational institution" includes universities and not just affiliated colleges. Therefore, services provided by Goa University, including affiliation services, are exempt as they are intrinsically linked to education provided to students, who are ultimately considered students of the university granting the degree.

Decision and Implications

In conclusion, the Bombay High Court allowed the writ petition and quashed the show cause notice issued to Goa University. The court firmly established that Goa University's activities, particularly the collection of affiliation fees, are not commercial in nature and are exempt from GST. This judgment provides significant relief to Goa University and may have broader implications for other universities and educational institutions in India regarding the GST treatment of statutory and regulatory fees related to educational activities.