The Bombay High Court at Goa quashed the GST demand raised on various regulatory fees collected by Goa University, including affiliation charges, prospectus fees, migration certificate charges, and similar statutory levies. It was opined that the activities of the University not being commercial in nature, are not amenable to GST. The Division Bench comprising Justices M.S. Karnik and Nivedita P. Mehta ruled in favour of the University, holding that such fees do not constitute “consideration” under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017, and hence, are not taxable. The petition was filed by the Goa university against a show cause notice issued by the Joint Commissioner of CGST, demanding over ₹4.83 crores in GST on the basis that these fees amounted to a supply of services. The University challenged the demand as well as certain CBIC circulars that attempted to extend GST liability to educational institutions for affiliation and other regulatory activities. Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc… Click Here
The counsel of the petitioner challenged the vires of the impugned circulars dated 17.02.2021 and paragraph 2 of the Circular dated 11.10.2021. It was argued that the educational activities carried out while imparting education cannot be termed as business under Section 2(17) because the same is not a trade, commerce, manufacture, profession, vocation or adventure. The fees, cess or any other consideration received by the creature of statute i.e. the Goa University Act, in furtherance of education are per se not ‘consideration’ to fall within the clutches of Section 7. The Court observed that Goa University, being a statutory body constituted under the Goa University Act, 1984, discharges a constitutional mandate of the State to provide higher education and is not engaged in any commercial activity.
The affiliation process, convocation events, issuance of migration certificates, and other functions are undertaken as part of the University’s public duties. These are governed by statutory provisions and are not in the nature of commercial transactions entered into via contract. Importantly, the Bench held that the regulatory and affiliation fees are not “consideration” under the CGST Act, as they are not linked to any contractual obligation or quid pro quo. Citing the Supreme Court’s jurisprudence on the meaning of “education” and “business,” the Court reiterated that fees collected for discharging regulatory or statutory functions cannot be construed as commercial receipts. Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc… Click Here
It was observed that “The fees collected by the University i.e. Ailiation fees, PG registration fees and convocation fees are not amenable to GST in as much as the fees collected by the University is not a consideration as contemplated in section 7 of CGST Act/GGST Act, as the fees are collected in the nature of statutory fee or regulatory fee in terms of the statutory provisions and not contractual in nature. The same cannot be given a colour of commercial receipts as there is no element of commercial activity involved in the subject transaction.” The bench further held that Goa University qualifies as an “educational institution” under Entry 66 of Notification No. 12/2017-CT(R) dated 28.06.2017, which exempts services provided by educational institutions to students, faculty, and staff. The University’s role in granting affiliations, conducting examinations, and awarding degrees is integrally connected with the educational process and therefore falls within the exemption notification.
The Court criticized the CBIC Circulars dated 17.06.2021 and 11.10.2024 as being contrary to statutory provisions. It ruled that such circulars cannot override or expand the scope of statutory law, and that their reliance to justify GST levy was wholly misplaced. The Bench concurred with the view taken by the Karnataka High Court in Rajiv Gandhi University of Health Sciences, which held that a university granting affiliation qualifies as an “educational institution.” Similarly, the Madras High Court in Madurai Kamaraj University v. Joint Commissioner of GST & Central Excise clarified that the term “educational institution” encompasses not just affiliated colleges, but also the affiliating university itself. Thus, the Court found merit in the submissions of the Senior Advocate that, even assuming the affiliation fees collected by the University constitute a service, such services would fall within the first limb of the exemption entry. This is because the students of affiliated colleges are, in essence, students of the University that confers the degree upon them. Clear all Your Doubts on RCM, TCS, GTA, OIDAR, SEZ, ISD Etc… Click Here
The GST has been demanded based on the income recorded in the financial statements, however the activity has to qualify supply to be made liable to GST, observed the bench. The petition was argued by Senior Advocate V. Raghuraman, along with a team of advocates including Mr. Gauravvardhan Nadkarni, Mr. Jay Mathew, Mr. B. Murthy, and Mr. Raghavendra C.R. The Court accepted their argument that the very foundation of the show cause notice was flawed due to the lack of jurisdictional facts supporting the levy of GST