University Of Mumbai vs Union Of India And Others

2026:BHC-OS:10764-DB
WP4389_2025.DOC
Vidya Amin
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION

WRIT PETITION NO. 4389 OF 2025

University of Mumbai … Petitioner
Vs
Union of India & Ors. … Respondents
_________
Mr. V. Raghuraman, Senior Counsel a/w. Mr. Raghvendra C.R, Mr. Sriraj Menon,
Mr. Avesh Ganja and Mr. Sandesh Panchal i/b. Satyaki Law Associates for the
petitioner.
Mr. Jitendra B. Mishra a/w. Mr. Saket Ketkar, Mr. Ashutosh Mishra and Mr.
Rupesh Dubey for respondent nos. 1 to 5.
Ms. Jyoti Chavan, Addl. G.P. for respondent nos. 6 and 7 – State of Maharashtra.
__________
CORAM : G. S. KULKARNI &
AARTI SATHE, JJ.
RESERVED ON : 23 APRIL 2026.
PRONOUNCED ON : 27 APRIL 2026.
Judgment (Per G. S. Kulkarni, J.) :-
1. Rule, made returnable forthwith. Respondents waive service. By consent
of the parties, heard finally.
2. This petition under Article 226 of the Constitution of India challenges the
order-in-original dated 27 January, 2025 along with Summary Order dated 28
January, 2025 issued by respondent no. 2 whereby a Goods and Services Tax
(GST) demand amounting to Rs.16,90,05,337/- has been confirmed against the
petitioner under the provisions of Section 74(1) of the Central Goods & Services
Tax (CGST) Act, 2017 read with the corresponding provisions of the Maharashtra
Goods and Services Tax Act, 2017, and Section 20 of the Integrated Goods and
Services Tax (IGST) Act, 2017. Also the penalty equivalent to the said amount
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under the provisions of Section 74(1) read with Section 122 of the CGST Act has
been confirmed against the petitioner by the impugned order. The petitioner has
also prayed for other reliefs, which are in relation to setting aside of the
rectification order dated 23 June, 2025, as also has prayed for quashing of
Circular No. 151/07/2021-GST dated 17 June, 2021 issued by Central Board and
Indirect Taxes as also instructions dated 5 October, 2018/22 June, 2020 issued by
respondent no. 3. The substantive prayers are prayer clauses (a) to (g) of the
petition, which are required to be noted, which read thus:
“a) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash the impugned order in original
bearinig No. 154/ADC/MUMSOUTH/VS/2024-25 dated 27.01.2025, along
with the summary order dated 28.01.2025 issued by respondent no. 2,
enclosed as “Exhibit-A and A1”.
b) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction quash the Rectification Order bearing No.
01/JC/MUMBAI SOUTH/UM/RECTIFY/2025-26 dated 23.06,2025 issued
by respondent no. 3, copy of the rectification order dated 23.06.2025 is
enclosed as “Exhibit -B”.
c) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash the impugned Circular No.
151/07/2021-GST dated 17/06/2021 issued by Central Board and Indirect
Taxes – Respondent no. 4, enclosed as “Exhibit-C”.
d) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash the impugned Circular No.
234/28/2024-GT dated 11.10.2024 issued by Central Board and Indirect
Taxes- respondent no. 4, enclosed as “Exhibit-D”.
e) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash Para 5.54 and Para 5.55 of
th
Minutes of 54 GST Council Meeting dated 09.09.2024 by respondent no. 5,
th
Copy of the para 5.54 and 5.55 of 54 GST Council Meeting dated
09.09.2024 enclosed as “Exhibit-E”.
f) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash Instruction bearing D.O.F. No.
CBEC/20/43/01/2017-GST dated 05.10.2018 issued by respondent no. 3,
enclosed as “Exhibit-F”.
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g) That this Court be pleased to issue writ of certiorari or any other
appropriate writ, order or direction to quash Instruction vide letter bearing
D.O.F. No. CBEC-20/10/07/2019-GST dated 22.6.2020 issued by
respondent no. 3, enclosed as “Exhibit-F1”.
3. The relevant facts are required to be noted: The petitioner is a University
established under a state legislation. It was established under the Bombay
University Act, 1953 and thereafter it was governed under the provisions of
Maharashtra Universities Act, 1994, which came to be repealed and succeeded by
promulgation of the Maharashtra Public Universities Act, 2016 with effect from 1
March, 2017.
4. The genesis of the present proceedings lies in a show cause notice dated 18
July, 2024 issued to the petitioner in Form DRC-01 under section 74 of the
CGST Act proposing to demand GST on the “affiliation fees” collected by the
petitioner along with interest and penalty for the financial year 2017-18 to 2022-
23.
5. The petitioner replied to the said show cause notice by its letter dated 28
October, 2024 inter alia contending that it being a statutory University, was
engaged in the statutory duties of granting affiliation to colleges and for which it
charges affiliation fees to undertake the various obligations under the statute for
granting affiliation and for renewal of affiliation being the statutory functions
under the provision of Maharashtra Public Universities Act and hence, the
petitioner was not liable to pay GST on the affiliation fees so collected.
6. Respondent no. 2 granted a hearing to the petitioner on the show cause
notice wherein the petitioner raised all the contentions as set out in the reply to
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the show cause notice. In pursuance of such hearing, respondent no. 2 passed the
impugned order-in-original dated 27 January, 2025, which was for the period
2017-18 till 2022-23 confirming the GST payable on affiliation fees amounting
to Rs.16,90,05,337/- along with applicable interest and penalty. Also, a summary
order was issued on the next date, i.e., on 28 January, 2025. Being confronted
with such order, the petitioner filed an application for rectification of the
impugned order-in-original, as per the provisions of Section 161 of CGST Act,
contending that the figures, which were furnished by the petitioner at the stage of
show cause notice were not correct, by setting out the said reasons and the revised
figures of total affiliation fees collected by the petitioner for the financial year
2017-18 till 2022-23 were submitted, along with all the relevant documents with
a request that the Order-in-Original be accordingly rectified.
7. The rectification application was adjudicated by the respondent no. 3-
Joint Commissioner of CGST and Central Excise, who passed the rectification
order dated 23 June, 2025 rejecting the petitioner’s application, inter alia
observing that the scope of rectification cannot be used as a substitute for the
appeal, as the grounds under which the petitioner had filed an rectification
application was on merits of the determination made in the Order-in-Original
and was of the nature required to be addressed by the appellate authority.
8. It is in these circumstances, the petitioner has filed the present petition
praying for the reliefs as noted by us hereinabove.
9. Mr. Raghuraman, learned senior counsel for the petitioner would support
the prayers inter alia contending that the impugned Order-in-Original is passed
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wholly without jurisdiction, inasmuch as respondent no. 2 has failed to consider
the issue as to whether the petitioner, which was a statutory University was at all
providing service under the provisions of CGST/MGST Act so as to become
liable for payment of GST. It is his submission that the impugned order is arising
out of the show cause notice which was issued on an assumed jurisdiction, i.e.,
jurisdiction which actually does not exist as to taxability of the activities of the
University. It is his submission that in order to invoke the provisions of CGST/
MGST Act to demand GST, the activities of the petitioner University to collect
affiliation fees were required to be amenable to GST. It is submitted that Section
9 of CGST Act, 2017, is a charging section which provides for levy of GST on
‘supply of goods or services or both”. Further, Section 7 of the CGST/MGST Act
defines the scope of the phrase ‘supply’, in terms whereof, all forms of supply of
goods or services or both such as sale, transfer, barter, exchange, license, rental,
lease or disposal made or agreed to be made for a consideration by a person in the
course of furtherance of business, is the only relevant consideration. It is also his
submission that the term ‘business’ defined under Section 2(17) of the CGST Act
certainly would not include the nature of activities of the statutory University
which is constituted under the act of State Legislature and although governed
under the Maharashtra Public Universities Act, 2016, the genesis is found to be in
the Bombay Universities Act, 1953 and thereafter Maharashtra Universities Act,
1994.
10. Mr. Raghuraman would submit that the educational activities of a statutory
university cannot be termed as business activities and the amounts received by it
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towards affiliation fees would not fall within the ambit of consideration for the
statutory activities of the University and hence not amenable for payment of GST.
In such context, it is submitted that commercial activities are required to be
interpreted considering the decision of the Supreme Court in All India Federation
1
of Tax Practitioners vs. Union of India , namely, commercial activities involving
production of goods and provisions of services in the context of GST being
destination-based consumption tax as it is borne by the consumer/end user in the
supply chain. The said view being reiterated by the Supreme Court in the case of
2
Union of India v. VKC Footsteps India (P) Ltd. .
11. As to how the term ‘education’ has been considered in several decisions of
the Supreme Court is also the contention of the petitioners relying on the several
decisions in regard to which the principles of law appear to be well-settled that a
wide meaning needs to be attributed to the word “education” when it concerns the
process of training and acquiring the knowledge, skills, developing mind and
character by learning. The contention is that the activities of the petitioner-
University cannot be categorized as business activities so as to attract the
provisions of Section 7 read with Section 9 of CGST/MGST Act. It is submitted
that the collection of affiliation fees for affiliation to be granted to colleges or
institutions under the provisions of Universities Act certainly does not qualify to
be consideration within the ambit of Section 2(31) of the CGST/MGST Act. It is
purely a statutory function which is required to be undertaken by the petitioner in
performance of its statutory duties under the Act. It is submitted that in any
1 2007(7) STR 625
(2021) 130 taxmann.com 193(SC)
2
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event, the statutory services being provided by the petitioner-University to the
students are covered under the Exemption Notification No. 12/2017-CT(R)
dated 28 June, 2017 drawing our attention to Entry No. 66 thereof as also the
Government of Maharashtra issuing a corresponding notification.
12. Mr. Raghuraman drawing the Court’s attention to the impugned Circular
No. 151/07/2021-GST dated 17 June, 2021 and Circular No. 234/28/2024-GT
dated 11 October, 2024 issued by respondent no. 4, would submit that the same
are ultra vires the provisions of the GST laws, as the impugned order considers
these circulars. The contention in this regard is that while clarifying the
exemptions available to the National Board of Examination, in paragraph 4(iii) of
the circular, respondent no. 4 has erroneously provided, that GST at the rate of
18% applies to other services provided by such boards, namely of providing
accreditation to an institution. Also in paragraph 2 on the basis of
th
recommendation of the 54 GST Council meeting, respondent no. 2 in Circular
No. 234/28/2024-GST dated 11 October, 2024, erroneously clarifies that
affiliation services provided by universities to their constituent colleges are not
covered within the ambit of exemptions provided to educational institutions. It is
submitted that such clarifications are contrary to the provisions of Section 7 and
Section 9 of the CGST/MGST Act. It is submitted that considering the settled
principles of law, there cannot be any clarifications which are contrary to the
statutory provisions and such clarifications would have no valid existence in law.
Lastly, it is submitted that the contention which the petitioner is canvassing is no
more res integra in view of the decision of the co-ordinate Bench of this Court at
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Goa in Goa University vs. Joint Commissioner of Central Goods and Services
3
Tax . It is submitted that in fact the issue initially had fell for consideration of the
High Court of Karnataka in the case of Principal Additional Director General,
4
DGGSTI vs. Rajiv Gandhi University of Health Sciences , which has been
followed by the co-ordinate Bench in the case of Goa University (supra). It is
submitted that the decision of High Court of Karnataka in Rajiv Gandhi
University of Health Science (supra) has been affirmed by the Supreme Court in
Special Leave Petition (Civil) Diary No. 59470 of 2024 vide order dated 24
January, 2025, being dismissed.
13. Mr. Raghuraman has also placed reliance on the decision of High Court of
Rajasthan at Jodhpur in the case of Rajasthan Technical University, Kota vs.
5
Union of India & Ors. wherein similar view has been taken that affiliation fees
are not consideration for any taxable activity.
14. On the aforesaid submissions, Mr. Raghuraman would urge that the
impugned order deserves to be quashed and set aside fundamentally for the
reason that the same has been passed by respondent no. 2 in the absence of
jurisdiction. Secondly, it is wholly contrary to the provisions of Sections 7 and 9
of the CGST/MGST Act as also it is bad on the ground that it places reliance on
the Circulars as noted by us hereinabove, which are in fact contrary to the
Exemption Notification dated 28 June, 2017 and lastly that the issue is no more
2025 SCC OnLine Bom 1262
3
4 (2024) 22 Centax 526 (Kar.)
D.B. Civil Writ Petition No. 9556 of 2024 decided on 23 February, 2026
5
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res integra in view of the pronouncement of this Court in the case of Rajiv
Gandhi University of Health Sciences (supra), Goa University (supra) and
Rajasthan Technical University, Kota vs. Union of India & Ors. (supra).
15. On the other hand, Mr. Mishra, learned counsel for the respondent has
supported the impugned order. Mr. Mishra has placed reliance on the reply
affidavit filed by Mr. Suhrud A. Rabde, Assistant Commissioner on behalf of
respondent no. 2 in opposing this petition. There are number of contentions,
which are urged in the reply affidavit including on the objection that the petition
ought not to be entertained on the ground that there is alternate remedy available
to the petitioner in filing the appeal assailing the Order-in-original by taking
recourse to Section 107 of CGST/MGST Act. Referring to the reply, Mr. Mishra
would submit that considering the scheme of GST legislation and more
particularly, purport of Sections 7 and 9 read with definition of ‘business’ under
Section 2(17) of the CGST Act, the activities of the petitioner are clearly in the
nature of supply, which includes all forms of services made for consideration and
as the term ‘business’ is of wide amplitude, to include activities irrespective of
profit motive. It is his contention that although the petitioner is engaged in
systematic and continuous activities involving collection of fees for affiliation of
colleges, which have a direct nexus with the services rendered. Such collection
would constitute ‘supply’ under Section 7 and attracting levy under Section 9. It
is, therefore, his submission that clearly jurisdictional facts were available for
respondent no. 2 to assume jurisdiction to issue show cause notice. It is also his
contention that the Exemption Notification dated 28 June 2017 is required to be
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read as applicable to the Educational Institutions and not the University and for
such reason, the Exemption Notification is of no consequences insofar as the
petitioner’s case is concerned. It is submitted that reliance placed on the decision
of Goa University (supra) is totally misplaced and distinguishable, as the same is
based on specific facts and does not lay down a universal proposition. On the
principle that taxability under GST is activity-specific and must be independently
examined. Reply affidavit has dealt with several contentions as urged in the
memo of the petition and parawise, however, the sum and substance in the reply
affidavit is that the nature of activity of the petitioner-University is very well
within the ambit of Sections 7 and 9 of the CGST Act.
16. Mr. Mishra would accordingly pray that the petition would not warrant
any interference and the same be dismissed.
Analysis and conclusion:-
17. We have heard learned counsel for the parties. We have perused the
record.
18. At the outset, the issue which falls for consideration is whether the
collection of affiliation fees by the petitioner, which is a statutory University,
would attract levy of the GST.
19. At the outset, we may observe that it is not in dispute that the petitioner is
a University, which was initially established under the provisions of the Bombay
University Act, 1953 and later on governed by the Maharashtra University Act,
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1994 and now governed by Maharashtra Public Universities Act, 2016. It would
be necessary to note the scheme of Maharashtra Public Universities Act, 2016.
Section 3 of the said Act provides for ‘Incorporation of Universities’, which inter
alia provides that each of the existing public universities specified in column (1)
of Part I of the Schedule A with effect from the date of commencement of the said
Act, shall be deemed to be constituted under the Maharashtra Public Universities
Act, 2016, for which it was constituted immediately before the date of
commencement of this Act. Section 4 provides that the objects of University, in
general, which shall be to disseminate, create and preserve knowledge and
understanding by teaching, research and development, skill development, training
and education, extension and service and by effective demonstration and
influence of its corporate life on society in general, and in particular, the objects
specified in clauses (1) to (18) thereof which are all in relation to dissemination of
knowledge. Section 5 provides for ‘Powers and duties of University’, which inter
alia include providing for instructions, extension, teaching, learning and training
in such branches or subjects or disciplines and courses of study; to make provision
for research and for the advancement and dissemination of knowledge, to make
provision to enable the affiliated colleges to undertake specialized studies and
several other powers and duties. This includes the power to grant affiliation to
colleges as per the provisions of Chapter X, which incorporate provisions from
Section 107 up to Section 124, dealing with Perspective Plan (Section 107),
Conditions of affiliation and recognition (Section 108), Procedure for permission
for opening new college or new course, subject, faculty, division (Section 109),
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Procedure for affiliation (Section 110), Procedure of recognition of institution
(Section 111), Procedure for recognition of private education provider (Section
112), Recognition to empowered autonomous skills development colleges
(Section 113), Continuation of affiliation or recognition (Section 114), Extension
of affiliation or recognition (Section 115), Permanent affiliation and recognition
(Section 116), Inspection of colleges and recognized institutions and report
(Section 117), Shifting college location (Section 118), Transfer of management
(Section 119), Withdrawal of affiliation or recognition (Section 120), Closure of
affiliated college or recognized institutions (Section 121), Autonomous university
department or institutions, college or recognized institution (Section 122),
Empowered autonomous colleges (Section 123), Empowered autonomous cluster
institutions (Section 124).
20. It appears to us that Chapter X insofar as granting of affiliation is
concerned, is a code by itself, for which the University certainly is required to
undertake activities which involves expenditure inter alia in relation to
verification of the necessary infrastructure for starting a college, expert
consultation on land and building, laboratories, and other necessary educational
facilities mandatorily to be made available by an educational institution to start a
college. All such activities are, however, within the framework of the statutory
scheme and not for any profit or per se any service being provided under any
business as the law would envisage. Such activities of the University are required
to be read in the context of definition of ‘affiliated college’, ‘college’, ‘conducted
college’, ‘university’, ‘university areas’, university teacher, as relied on behalf of the
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petitioner. All such activities do not admit of any commercial concept, so as to
regard the activities of the university as any business activities. It is in fact a
mission to disseminate education, where the considerations of commerce are alien
to the object and purpose of a statutory university being founded under the law.
21. The question is whether such activities would fall within the ambit and
purview of Section 7 of the CGST/MGST Act so as to attract the applicability of
Section 9 of the CGST/MGST Act. Section 7 falls under Chapter III, which
provides for ‘Levy and Collection of Tax’. Section 7 defines the ‘Scope of supply’.
Section 9 is the charging provision for ‘Levy and collection’. It would be
imperative to extract the said provisions, which read thus:
“7. Scope of supply. (1) For the purposes of this Act, the expression
“supply” includes-
(a) all forms of supply of goods or services or both such as sale,
transfer, barter, exchange, licence, rental, lease or disposal made or agreed
to be made for a consideration by a person in the course or furtherance of
business;
(aa) the activities or transactions, by a person, other than an
individual, to its members or constituents or vice-versa, for cash, deferred
payment or other valuable consideration.
Explanation. For the purposes of this clause, it is hereby clarified
that, notwithstanding anything contained in any other law for the time
being in force or any judgment, decree or order of any Court, tribunal or
authority, the person and its members or constituents shall be deemed to
be two separate persons and the supply of activities or transactions inter
se shall be deemed to take place from one such person to another;
(b) import of services for a consideration whether or not in the
course or furtherance of business and;
(c) the activities specified in Schedule I, made or agreed to be
made without a consideration;
(1-A) where certain activities or transactions constitute a supply in
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accordance with the provisions of sub-section (1), they shall be treated
either as supply of goods or supply of services as referred to in Schedule
II.
(2) Notwithstanding anything contained in sub-section (1), -
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central
Government, a State Government or any local authority in which they
are engaged as public authorities, as may be notified by the Government
on the recommendations of the Council, shall be treated neither as a
supply of goods nor a supply of services.
(3) Subject to the provisions of sub-sections (1), (1-A) and (2)],
the Government may, on the recommendations of the Council, specify,
by notification, the transactions that are to be treated as -
(a) a supply of goods and not as a supply of services; or
(b) a supply of services and not as a supply of goods.
9. Levy and collection. - (1) Subject to the provisions of sub-section (2),
there shall be levied a tax called the central goods and services tax on all
intra-State supplies of goods or services or both, except on the supply of
alcoholic liquor for human consumption and un-denatured extra neutral
alcohol or rectified spirit used for manufacture of alcoholic liquor, for
human consumption, on the value determined under section 15 and at
such rates, not exceeding twenty per cent., as may be notified by the
Government on the recommendations of the Council and collected in
such manner as may be prescribed and shall be paid by the taxable
person.
(2) The central tax on the supply of petroleum crude, high speed
diesel, motor spirit (commonly known as petrol), natural gas and aviation
turbine fuel shall be levied with effect from such date as may be notified
by the Government on the recommendations of the Council.
(3) The Government may, on the recommendations of the Council,
by notification, specify categories of supply of goods or services or both,
the tax on which shall be paid on reverse charge basis by the recipient of
such goods or services or both and all the provisions of this Act shall
apply to such recipient as if he is the person liable for paying the tax in
relation to the supply of such goods or services or both.
(4) The Government may, on the recommendations of the Council,
by notification, specify a class of registered persons who shall, in respect
of supply of specified categories of goods or services or both received
from an unregistered supplier, pay the tax on reverse charge basis as the
recipient of such supply of goods or services or both, and all the
provisions of this Act shall apply to such recipient as if he is the person
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liable for paying the tax in relation to such supply of goods or services or
both.
(5) The Government may, on the recommendations of the Council,
by notification, specify categories of services the tax on intra-State
supplies of which shall be paid by the electronic commerce operator if
such services are supplied through it, and all the provisions of this Act
shall apply to such electronic commerce operator as if he is the supplier
liable for paying the tax in relation to the supply of such services:
Provided that where an electronic commerce operator does not
have a physical presence in the taxable territory, any person representing
such electronic commerce operator for any purpose in the taxable
territory shall be liable to pay tax:
Provided further that where an electronic commerce operator
does not have a physical presence in the taxable territory and also he does
not have a representative in the said territory, such electronic commerce
operator shall appoint a person in the taxable territory for the purpose of
paying tax and such person shall be liable to pay tax.”
22. On a plain reading of Section 7(1)(a), it is clear that the expression ‘supply’
in the present context necessarily would include all forms of supply of goods or
service or both such as sale, transfer, barter, exchange, licence, rental, lease or
disposal made or agreed to be made for a consideration by a person in the course
of furtherance of business. In our opinion, considering the nature of the statutory
activities being undertaken by the University and in relation thereto, collecting of
the affiliation fees certainly cannot be held to be a from of supply of any service of
the nature as contemplated in clause (a) of Section 7(1). The respondent’s
contention of simplicitor selecting the words “furtherance of business” to submit
that the business would be required to be understood in the context of Section
2(17)(a), is not well founded inasmuch as the words ‘furtherance of business’ as
used in clause (a) of Section 7(1) are required to be read not in isolation but in the
context of the preceding contents of clause (a), i.e., that supply of goods or
services in the context such as sale, transfer, barter, exchange, licence, rental, lease
or disposal which is made or agreed to be made for a consideration either in the
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course or furtherance of business. Thus, none of the contents of clause (a) of
Section 7(1) would imply, the inclusion of statutory activities of granting of
affiliation and for that matter, collection of affiliation fees. Even the reliance on
definition of ‘business’ under Section 2(17)(a) also would not assist the
respondents, which defines business to be “any trade, commerce, manufacture,
profession, vocation, adventure, wager or any other similar activity, which needs
to be read ejusdem generis where such activity is for a pecuniary benefit and
activities incidental thereto.
23. It is thus difficult to accept the respondent’s contentions as canvassed that
the nature of the activities of the University which are singularly and purely
intended to further the object and intention of the Act can at all be categorized as
trade, commerce, manufacture, profession, vocation , adventure, wager etc. In
such context, it is imperative to note the object and intention of the Act, which is
clear from the long title of the Maharashtra Public Universities Act, 2016, which
reads thus:
“An Act to provide for academic autonomy and excellence,
adequate representation through democratic process,
transformation, strengthening and regulating higher
education and for matters connected therewith or incidental
thereto.”
24. In the aforesaid clear object and intention of the statute to regard the
petitioner-university undertaking “business” in collection of the affiliation fees, in
our opinion, would amount to doing violence to the purpose and intention of the
legislation. Thus, having examined Section 7 and its purport in regard to its
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applicability in the context of the petitioner University receiving affiliation fee , in
our opinion, there ought not to be any ambiguity that the collection of affiliation
fees by the petitioner University in the discharge of its statutory functions, as
noted hereinabove, can at all amount to a “supply” as defined under Section 7 of
the CGST Act. As a consequence thereto, once such activity itself is not ‘supply’
and/or it is not business within the meaning and purview of sub-section 1(a) of
Section 7, there is no question of the charging provision i.e. Section 9 which
provides for levy and collection being applicable. As a sequel thereto, once
Sections 7 and 9 itself are not applicable, the proper officer would not have
jurisdiction to issue show cause notice under section 74 of CGST Act.
25. It is well settled that GST is a destination-based tax. If the said provisions
are to be made applicable to affiliation fees, an intention would be required to be
gathered that it is its students who may ultimately become liable to bear the brunt
of such taxes. This does not appear to be an intention including to consider
canvass of the exemption notification dated 28 June 2017, whereby the education
activities as specified in the said notification are being exempted. If that be so, we
wonder as to how the statutory university can itself be subjected to any levy of
GST and that too taking recourse to Sections 7 and 9. Thus looked from any
angle, the insistence of the proper officer to levy GST on the affiliation fees being
received by the petitioner-university appears to be lacking any basis either under
the GST laws and even otherwise.
26. Having reached the aforesaid conclusion, we do not intend to delve on the
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settled principles of law in the several decisions considering the scope and ambit
of the term “education”, and as to what would amount to education. This more
particularly in the light of such decisions, if we do not recognize that statutory
University constituted under the State Legislation (like the petitioner), is not to
be considered to be engaged in education, but in business, this in our opinion, is
as good as making a mockery of the University law and/or a gross absurdity to
read the Maharashtra Public Universities Act in the manner the GST authorities,
intend to construe for the purpose of levy.
27. Thus, on first principles, we are in complete agreement with Mr.
Raghuraman when he submits that the proper officer in the present case has acted
wholly without jurisdiction in issuing show cause notice and for the further action
of passing the Order-in-Original levying and demanding GST from the petitioner
on the affiliation fees.
28. We also find much substance in the contentions as urged by Mr.
Raghuraman relying on the decision of the co-ordinate Bench of this Court in
Goa University (supra), which follows the decision of High Court of Karnataka in
Rajiv Gandhi University of Health Sciences (supra). The reliance on behalf of the
petitioner on the decision of the High Court of Rajasthan in Rajasthan Technical
University, Kota vs. Union of India & Ors. (supra) is also apposite. These are the
decisions in which the issue before the Court was similar to the one which fell for
our consideration in the present proceedings as to whether on the activities of the
concerned Universities in receiving the affiliation fee, GST would at all be
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leviable. We note the decision of the co-ordinate Bench of this Court in Goa
University (supra) wherein following the decision in Rajiv Gandhi University of
Health Sciences (supra) rendered by the Karnataka High Court, this Court in the
very context of the said universities collecting/receiving affiliation fees on which
GST was sought to be levied, made the following observations:
“"35. Let us turn to the present case. The Petitioner University is
established under a statute, namely the Goa University Act, 1984, with the
purpose of ensuring proper and systematic instruction, teaching, training,
and research. The fees, such as affiliation fees, prospectus fees, migration
certificate fees, 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, and this duty is being discharged through the University.
36. We have already noticed the requirements of Section 7 of the CGST
Act. Section 2(31) of the CGST Act defines the phrase "consideration,
whereby money or money value, in respect of or in response to a supply,
would qualify at consideration. In our opinion, affiliation is undertaken by
the University in terms of statutory requirements and in discharge of public
functions; therefore, the fee collected for affiliation fails to qualify as
"consideration." The fees collected by the University, Le, affiliation fees, PG
registration fees, and convocation fees, are not amenable to GST, as the fees
are statutory or regulatory in nature and not contractual. The same cannot
be given the colour of commercial receipts, as there is no element of
commercial activity involved in the subject transaction. In Assistant
Commissioner of Income Tax (Exemptions) v. Ahmedabad Urban
Development Authority (supra), Para 160 held as follows:
"Fee, cess and any other consideration has to receive a purposive
interpretation in the present context. If a fee, cess, or such
consideration is collected by a State department or statutory entity in
furtherance of its mandate, such collection cannot be treated as
consideration towards trade or business. Therefore, regulatory activity
necessitating the collection of fees or cess in terms of enacted law, or
collection of amounts in furtherance of activities such as education,
regulation of professions, etc., are per se not business or commercial in
nature... [text retained as provided].
37. The concept of consideration involves an element of contractual
relationship, wherein the person undertaking the activity of supply does so at
the desire of another in exchange for consideration, involving a quid pro
quo. In our opinion, the fee collected for affiliation will not qualify as
consideration, since neither quid pro quo is involved nor is it a contractual
obligation. In Principal Addl. Directorate General DGGSTI v. Rajiv Gandhi
University of Health Sciences (supra), the Karnataka High Court in Para
VIII held as follows:
"Affiliation creates a kind of umbilical cord between the affiliating
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body and the affiliated entity... [text retained as provided with minor
grammatical corrections]... In view of all this, the Revenue is not
justified in levying Service Tax on the income accruing to the
University on account of affiliation..... The periodicity of collection of
affiliation-related fees pales into insignificance."
38. The Petitioner is actively involved in imparting education to
students and acts as a regulator of education. It is by virtue of the affiliation
granted by the Petitioner University to constituent colleges that such colleges
conduct programmes of study. The activities undertaken by the Petitioner
University are statutory and regulatory in nature.
39. The High Court of Madras in Manonmaniam Sundaranar University
v The Joint Director (GST Intelligence), 2021-TIOL-888-HC-MAD-ST,
held that affiliation fees, as well as inspection commissions collected by the
University, are statutory levies. It was held that, by performing such
activities, the Petitioner is only discharging a statutory function and the fees
collected are not amenable to Service Tax. From a conjoint reading of the
statutory provisions and judicial precedents, the fees collected by the
Petitioner University under statutory mandate for regulating affiliated
colleges cannot be brought within the GST net.
40. We are in respectful agreement with the Karnataka High Court in
Rajiv Gandhi University of Health Sciences (supra), which held that a
University granting affiliation is also an educational institution. The Madras
High Court in Madurai Kamaraj University v. Jt. Comm of GST & C.Ex.,
Madurai [(2021) 54 GSTL 385 (Mad.)] held that the term "educational
institution" includes not only affiliated colleges but also the University itself.
Even assuming that affiliation fees constitute a service, such services would
fall within the exemption entry, as students of affiliated colleges are
ultimately students of the University that grants the degree.
41. Without affiliation from the Petitioner University, constituent
colleges are not permitted to admit students for courses. Further,
examinations are conducted by the Goa University, leading to the award of
degrees. Hence, the fees collected from colleges are covered by the
exemption notification. The activity of collecting affiliation fees is exempt
from GST and is therefore not liable to tax.
42. Goa University is actively involved in imparting education and
regulating education. Section 24 of the Goa University Act empowers the
University to frame ordinances relating to admission, enrolment, and fees for
admission and examination. Affiliation forms the basis upon which affiliated
colleges conduct courses, examinations, and degree-awarding processes. The
term "education" should not be narrowly restricted to classroom instruction;
rather, it includes curriculum design, affiliation to maintain educational
standards, and conferral of degrees."
29. In similar facts, in Rajasthan Technical University, Kota vs. Union of India
& Ors. (supra), the High Court of Rajasthan High Court held as under:
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“41. Affiliation is a statutory and regulatory function intrinsically
connected with imparting education, conduct of examinations, and
conferment of degrees, and does not amount to a commercial activity.
Colleges merely act as facilitators or extended arms of the University; the real
beneficiaries of affiliation are students, who are ultimately conferred degrees
by the University.
FINDINGS
42. Issue (i): Whether Grant of Affiliation is a Supply of Service-
Section 7 of the CGST Act contemplates supply only when an
activity is carried out in the course or furtherance of business. Grant of
affiliation is a statutory function enabling the University to discharge its core
mandate of imparting education through affiliated colleges. Applying the
doctrine of ejusdem generis to Section 2(17), affiliation cannot be equated
with trade, commerce, or any activity of commercial character. Accordingly,
we hold that grant of affiliation does not constitute a "supply of service".
42.1. Issue (ii): Whether Affiliation Fees Constitute Consideration-
Affiliation is compulsory for colleges; there is no element of choice,
bargaining, or reciprocity. The fee is a statutory levy, not a payment for a
negotiated service. We thus hold that in absence of quid pro quo, the
essential element of "consideration" is missing.
42.2. Issue (iii): Applicability of Exemption under Entry 66.
Even assuming affiliation to be a service, it is inseparably connected
with: curriculum approval, admission of students, conduct of examinations,
and conferment of degrees. Students admitted through affiliated colleges are,
in law, students of the University. We hold that entry 66 must be interpreted
purposively to cover services forming the backbone of educational delivery,
including affiliation.
42.3. Issue (iv): Validity of GST Levy :-
Circulars or executive clarifications cannot override statutory
provisions or exemption notifications. Levy of GST on affiliation fees results
in indirect taxation of education, which is Impermissible. We hold that the
impugned levy is therefore without authority of law.
CONCLUSION
43. As an upshot of the what is reasoned and discussed in the preceding
part, it is held that grant of affiliation by a University is a statutory and
regulatory function and does not constitute a supply of service under the
CGST Act. Affiliation fees are not consideration for any taxable activity. Even
otherwise, affiliation services are exempt under Entry 66 of Notification No.
12/2017-CT (Rate). Levy and collection of GST on affiliation fees is illegal
and unsustainable.
30. We are in complete agreement with the view taken by this Court in Goa
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University (supra) as also decision of High Court of Karnataka in Rajiv Gandhi
University of Health Sciences (supra) as also the High Court of Rajasthan in
Rajasthan Technical University, Kota vs. Union of India & Ors. (supra). As a
consequence thereto, we are of the clear opinion that the petition insofar as
challenge to the impugned order-in-original to be set aside, needs to succeed.
31. Having reached to the aforesaid conclusion, we may also observe that even
assuming that the collection of affiliation fees was to attract the levy of GST
(when it is not) certainly the impugned notification when it covers educational
institutions and in regard to the nature of services as set out in the notification in
heading ‘9992’ or heading ‘9963’, the same needs to apply also to the University
as held by the co-ordinate Bench of this Court in Goa University (supra). The
relevant observations in that regard are required to be noted :
44. It is next contended by the learned Senior Advocate for the
petitioner University that services, if any, provided by the Petitioner
University to the students are covered under exemption i.e., Entry No. 66 of
Notification No. 12/2017-CT (R) dated 28.06.2017. The Union of India in
the exercise of powers conferred under Section 11(1) of the CGST Act, 2017,
has issued a Notification dated 28.06.2017, also the Government of Goa has
issued corresponding notification exempting certain services from the GST.
Entry No. 66 of the Notification No. 12/2017-CT (R) dated 28.06.2017
exempts services in relation to education. Entry No.66 of said Notification
read as:

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45. We thus find that the said entry firstly provides that the service
provided by an educational institution to its students, faculty and staff are
exempted and secondly, services provided by third parties to an educational
institution relating to the matters specified therein are exempted from fees.”
32. On the conspectus of the aforesaid discussion, we are not inclined to accept
any of the contentions as urged on behalf of the respondents. We are also not
impressed to accept the revenue’s contention relying on the decision of Madras
High Court in Bharathidasan University vs. Joint Commissioner of GST (ST-
6
Intelligence) Trichy Division & Anr. , considering that this decision has not
2026 SCC OnLine Mad 1190
6
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examined the issue in the same perspective as it has has been examined by us in
the present petition as also the consideration of such issues in the decision of Goa
University (supra), as also decision of High Court of Karnataka in Rajiv Gandhi
University of Health Sciences (supra) as also the High Court of Rajasthan in
Rajasthan Technical University, Kota vs. Union of India & Ors. (supra).
33. Before parting, it is pertinent to note that the decision of the High Court of
Karnataka in Rajiv Gandhi University of Health Sciences (supra) has attained
finality in the Supreme Court rejecting the SLP and for such reason, once the
same has been followed by the co-ordinate Bench of this Court at Goa in Goa
University (supra), in our opinion, it would be imperative for the GST authorities
to adhere to the said decisions and accordingly take an appropriate view in law,
which is exactly not being done in the present case.
34. We clarify that considering the view which we have taken, we have not
adjudicated on the legality of the impugned circulars as assailed in the petition,
suffice it to observe that no circular which is not conforming to the substantive
provisions of law can stand and be applied.
35. In the light of the above discussion, the petition needs to succeed. It is
accordingly allowed in terms of prayer clauses (a) and (b).
36. Rule is made absolute in the aforesaid terms. No costs.
(AARTI SATHE, J.) (G. S. KULKARNI, J.)
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Signed by: Vidya S. Amin
Designation: PS To Honourable Judge
Date: 27/04/2026 19:00:17