Blog No. 84: No GST on affiliation fees

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Goa University Vs Joint Commissioner of Central Goods and Service Tax and Ors. [HC-Bom]

(Judgment dated 15.04.2025)

Hon’ble Bombay High Court at Goa quashed a ₹4.83 Crore GST demand imposed on Goa University, inter-alia, holding that GST is not leviable on affiliation fees. The Hon’ble court clarified that said fees lack commercial intent; that even otherwise, presuming the same qualify as “supply”, it falls under the exemption provided to educational institutions under Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017.

You  can read in detail about this case below:

Facts of the Case

  1. Goa University, established under the Goa University Act, 1984, is set up to provide higher education in the State of Goa. The university has granted affiliation to approximately 67 colleges in Goa.
  2. The University did not charge GST on affiliation fees.
  3. The University also collected other fees for issuing migration certificates, conducting convocations, and rendering other statutory academic functions and did not charge GST on said fees by treating them as student-related activities, which are exempt from GST.
  4. The University obtained GST registration and paid GST on rental income received from third parties for setting up kiosks, etc.
  5. In January 2024, CGST authorities requested details on payment of GST on affiliation fees, which ultimately led to the issuance of a show cause notice dated 05.08.2024, and an Order-in-Original dated 28.01.2025.
  6. The University filed a present writ petition challenging the show cause notice, the order issued under Section 74. Besides this, the University has also challenged the validity of Circular No. 151/07/2021-GST dated 17.06.2021 and Circular No. 234/28/2024-GST dated 11.10.2024 issued by CBIC, as well as Press Note dated 09.09.2024 issued by the GST Council.

Questions Framed

  1. Whether respondents have jurisdiction to levy GST on the affiliation fees collected by Goa University from its affiliated colleges?

Legal Provisions

  1. Section 2(17) and 7 of the CGST Act: Defines “business” and “Scope of Supply”.
  2. Notification 12/2017-CT(R) dated 28.06.2017: Exempts services provided by educational institutions to their students, faculty, and staff {Entry 66(a)} and services provided to educational institutions {Entry 66(b)}.
  3. CBIC Circulars dated 17.06.2021 and 11.10.2021: Attempted to provide clarification on the applicability of exemption on regulatory fees (i.e., affiliation fees) by presuming that they are supplied under section 7 of the CGST Act without examining their statutory nature.

Observations of the Court

Qua “business” and “Scope of Supply”

  1. The fees, such as affiliation fees, prospectus fees, migration certificate fees, and 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 which is being discharged through the University.
  2. The affiliation is undertaken by the University in terms of the requirement of the statute and discharge of public functions, the fee so collected for affiliation fails to qualify as ‘consideration’.
  3. The fees collected by the University are statutory or regulatory and cannot be termed as contractual in nature. The same cannot be characterized as commercial receipts. 

Qua Exemption Notification 12/2017-CT (Rate) dated 28.06.2017

  1. Affiliation services provided by Goa University are covered under the first limb of exemption entry, as ultimately a student of an affiliated college is deemed as a university student, which grants him the degree.

Qua Circulars issued by CBIC

  1. CBIC circular dated 17.06.2021 and 11.10.2024 assumes that the activity of affiliation service provided by the University to its constituent colleges would qualify as a supply, which is not an accurate approach.
  2. These Circulars overlooked the exemption available under Serial No. 66(a) of the Notification No. 12/2017-CT (Rate) dated 28.06.2017. Hon’ble court observed that the university is also an educational institution, and students at the university include students enrolled with the affiliated colleges.
  3. The Circulars are, therefore, erroneous qua affiliation services.

Other observations

  1. Where the primary activity is not considered a business, incidental or ancillary transactions are only deemed business if there is a clear intent to conduct business in those specific activities. The burden to prove such intention rests on the department.

Decision of the Court

  1. The show cause notice dated 05.08.2024 and the order dated 28.01.2025 demanding GST of ₹4.83 crore on fees collected by Goa University are quashed.
  2. The impugned CBIC circulars and GST Council press note are declared without legal force insofar as they seek to impose GST on statutory fees collected by the University.
  3. The University’s fees for affiliation, migration, convocation, and other statutory academic activities are exempt from GST under Serial No. 66(a) of the Notification No. 12/2017-CT (Rate) dated 28.06.2017.

Remarks

  1. The issue of taxability of “affiliation fees” has become a contentious issue where the Hon’ble High Courts are differing in their views. To Quote:
    1. Hon’ble Karnataka High Court in the matter of Principal Additional Director General, DGGSTI and Ors. Vs Rajiv Gandhi University of Health Sciences, WA No. 856 of 2022 (T-RES) dated 30.07.2024 [Para VIII(d)] has held that income from grant of affiliation to various colleges is not a service at all and is not chargeable to service tax within the preview of Chapter V of Finance Act, 1994.
    2. Hon’ble Madras High Court in the matter of Madurai Kamaraj University Vs Joint Commissioner, WP (MD) No. 20502 of 2019 dated 16.08.2021 (Para 19, 20) has held that granting affiliation to various educational institutions is exempt from service tax within the purview of Chapter V of Finance Act, 1994 in terms of Serial No. 9(b)(iv) of the Notification No. 25/2012-ST dated 20.06.2012, as substituted from 11.07.2014 (now Serial No. 66(b)(iv) of the Notification No. 12/2017-CT (Rate) dated 28.06.2017).
    3. Hon’ble Bombay High Court at Goa in this matter also held that affiliation fees are not considered a “supply”. Even otherwise, the same has been observed to be exempt under Serial No. 66(a) of the Notification No. 12/2017-CT (Rate) dated 28.06.2017.
    4. Hon’ble Delhi High Court in the matter of National Board of Examination in Medical Sciences Vs Union of India and Ors., WP No. 1298 of 2023 dated 16.04.2024 has held that affiliation fee is not exempt vide Serial No. 66(a) of the Notification No. 12/2017-CT (Rate) dated 28.06.2017. The court, however, did not go into the question of said activity being a supply or not.
    5. Hon’ble Telangana High Court in the matter of Care College for Nursing and Ors Vs Kaloji Narayana Rao University of Health Sciences and Ors., WP No. 34617 of 2022 dated 17.10.2023 has held that affiliation fee is not exempt vide Serial No. 66 of the Notification No. 12/2017-CT (Rate) dated 28.06.2017.
  1. Though the judicial position differs, it appears to the author that activity of affiliation should not be termed as supply, as “education” in its core activities has never been made subject to taxation under indirect tax laws. There is a chequered jurisprudence over this subject. Even otherwise, the exemption given under Serial No. 66(a) as well as 66(b)(iv) of the exemption notification brings the same out of the clutches of taxability. Therefore, GST should not be levied on the activities of granting affiliation.

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