GST Update

 Desk of CA. Praveen Sharma – 1008 Series (CAPS) 

BOMBAY HIGH COURT IN THE CASE OF University of Mumbai

A statutory university challenged a GST demand of ?16.90 crore raised on affiliation fees collected from colleges. The department treated these fees as taxable services and issued demand under GST law.

The university argued that granting affiliation is a statutory function carried out under state law. The fees collected are regulatory in nature and not consideration for any commercial service. Therefore, GST should not apply.

The Court held that affiliation is part of the university’s legal duties and cannot be treated as a supply. Since there is no supply, GST cannot be levied. The activity is not in the nature of business or commerce, and affiliation fees are not contractual payments but statutory charges.

The Court further observed that GST authorities lacked jurisdiction to issue the demand. It also noted that judicial precedents have consistently held that affiliation fees are not taxable. Even otherwise, services relating to education are exempt under the relevant notification.

The department’s argument that university activities fall within the wide scope of business was rejected. The Court clarified that statutory educational functions cannot be equated with commercial activities. It also held that circulars cannot override the provisions of law.

Final outcome: The GST demand of ?16.90 crore was set aside and the order was quashed. Affiliation fees collected by universities are not liable to GST.

LINK: CA. Praveen Sharma on Linkedin

Regards
CAPS