Statutory University Affiliation Fees Are Not Consideration for "Supply" and Are Not Taxable Under GST

In brief

The question

1. Whether the collection of affiliation fees by a statutory University constitutes a "supply" of service in the course or furtherance of "business" under Section 7 of the CGST Act.

The court held

The Court answered the issues in the negative, holding that the grant of affiliation is a statutory/regulatory function and not a taxable supply.

It also directed

The Court quashed the Order-in-Original dated 27 January 2025 and the Rectification Order dated 23 June 2025.

It held that the GST authorities acted without jurisdiction in demanding tax on affiliation fees.

The Writ Petition was allowed, and Rule was made absolute in terms of the prayers seeking to set aside the demand and the rectification refusal.

01Facts

The Petitioner, a statutory University established under the Maharashtra Public Universities Act, 2016, challenged an Order-in-Original dated 27 January 2025 and a subsequent Rectification Order dated 23 June 2025.

¶ 2 & 3

The Respondent authorities (GST Department) issued a show-cause notice and confirmed a demand of Goods and Services Tax (GST) amounting to ₹16,90,05,337/- plus penalty.

¶ 2 & 4

The demand was predicated on the "affiliation fees" collected by the University from various colleges for the financial years 2017-18 to 2022-23.

¶ 4

The Petitioner contended that as a statutory body performing regulatory functions under state law, its activities did not constitute a "supply" or "business" under GST law.

¶ 5 & 9

02Issues

i.1. Whether the collection of affiliation fees by a statutory University constitutes a "supply" of service in the course or furtherance of "business" under Section 7 of the CGST Act.

¶ 18 & 22

ii.2. Whether the Petitioner University is liable to pay GST on such affiliation fees under Section 9 of the CGST/MGST Act.

¶ 24

iii.3. Whether statutory affiliation services are covered under the Exemption Notification No. 12/2017-CT(R).

¶ 11 & 31

03Law Applied

The Court primarily applied Section 7 (Scope of Supply) and Section 9 (Levy and Collection) of the CGST Act, 2017.

¶ 21

It interpreted the definition of "business" under Section 2(17) using the principle of ejusdem generis.

¶ 22

The Court relied on Entry No. 66 of Exemption Notification No. 12/2017-CT(R) regarding services provided by educational institutions.

¶ 31

Key precedents included Goa University v. Joint Commissioner of CGST [2025 SCC OnLine Bom 1262], Rajiv Gandhi University of Health Sciences v. Principal ADG, DGGSTI [(2024) 22 Centax 526 (Kar.)]—which was affirmed by the Supreme Court—and Rajasthan Technical University v. Union of India [DB Civil WP No. 9556/2024].

¶ 12, 13, & 28

Provisions in the judgment · 34 · Linked ones open on LawLens

Central Goods and Services Tax Act, 2017 9 provisions

Section 2 Section 7 Section 9 Section 11 Section 15 Section 74 Section 107 Section 122 Section 161

Maharashtra Goods and Services Tax Act, 2017 Section 7 Section 9 Section 107

Integrated Goods and Services Tax Act, 2017 Section 20

Maharashtra Public Universities Act, 2016 21 provisions

Section 3 Section 4 Section 5 Section 107 Section 108 Section 109 Section 110 Section 111 Section 112 Section 113 Section 114 Section 115 Section 116 Section 117 Section 118 Section 119 Section 120 Section 121 Section 122 Section 123 Section 124

04Reasoning

The Court reasoned that the University’s objects under the Maharashtra Public Universities Act are to disseminate knowledge and regulate higher education, which are purely statutory and public functions.

¶ 19 & 20

Consequently, the collection of affiliation fees is a statutory mandate rather than a commercial activity; thus, it does not fall within the definition of "business" under Section 2(17) or "supply" under Section 7(1)(a).

¶ 22-24

Applying ejusdem generis, the Court held that statutory regulatory activities cannot be equated with trade or commerce.

¶ 22

Since the activity is not a "supply," the charging provision of Section 9 remains inapplicable.

¶ 24

Furthermore, the Court noted that even if affiliation were considered a service, it would be exempt under Entry 66 of Notification No. 12/2017, as the University acts as an "educational institution" and the students of affiliated colleges are, in law, students of the University.

¶ 31-33