I N T HE judgment of the writ petition filed by Goa University Registrar, Vishnu Sakharam Nadkarni, delivered on April 15, 2025, Justices M.S. Karnik and Nivedita P.Mehta, at Goa Bench of the Bombay High Court, have held that the activities of the petitioner-Goa University, not being commercial in nature, are not amenable to GST, as there is a complete absence of jurisdictional facts to issue the impugned show cause notice. In view of this legal position, the High Court allowed the Petitioner-University’s petition in terms of its prayer clause (a) and quashed the impugned show cause notice issued by the respondent – Joint Commissioner of Central Goods and Services Tax, Panjim (Goa), on August 5, 2024, along with consequential relief. The petitioner-University’s challenge was to the show cause notice issued by the respondentJoint Commissioner, on August 5, 2024, proposing to demand GST on the educational activities of the petitioner-University. During pendency of the petition and after the case was heard, the Joint Commissioner heard on the notice and passed order in original under section 74 of the GST Act, on January 28, 2025. This order was also challenged by way of an amendment. The validity and legality of the Circular of February 17, 2021 and paragraph of the Circular 2 of October 11, 2021, both issued by the respondent- Central Board of Indirect Taxes and Customs.According to the HC, where themain and dominant activity of theUniversity is education, it cannotbe termed as business activity todemand tax. In support of thisview, the HC has relied upon thejudgment –Commissioner of SalesTax v. Sai Publication Fund-(2002)4 SCC 57. 

 

The petitioner had also challenged the legality of paragraph 6(ii) of the Press Note of September 9, 2024 issued to summarize recommendations made in the 54th meeting of the GST Council. The HC has stated that no doubt, the petitioner could have challenged the order in original, however, the HC examined the petition in the context of absence of jurisdictional facts to issue the impugned show cause notice. If the HC had held against the petitioner on this aspect, then the petitioner had to avail of the remedy provided under the GST Act, 2017, to challenge the order in original. Through the show cause notice of March 28, 2018, the petitioner- University was asked to pay Service Tax , on affiliation fee by the Deputy Director, DGGI. Goa. After receipt of reply, the show cause notice proceedings were dropped by an order passed by the Asst Commissioner, GST, DivII, Goa, on April 10, 2019. The University obtained GST registration and is under administrative control of Central Tax Authorities.

 

The University has been remitting GST on the rent received from third parties and also filing returns on regular basis. The GST authority has demanded from the petitioner, GST amounting to Rs 1,90,30,494/- for affiliation services rendered by it along with applicable interest and penalty. In its reply on June 10, 2024, the University denied the tax liability as its demand was based on the exempted supplies. Through the impugned show cause notice, the tax demand was to the tune of Rs 4, 83,59747/- This notice was the subject matter of challenge in this petition. In the HC’s view the impugned Circular of October 11, 2024, in its application to the petitionerUniversity is contrary to the plain language of the notification which exempts the services by educational institution to its students, faculty and staff and also services provided to educational institution. The impugned clarifications issued by the respondent2, does not notice existence of the under clause (a) of entry 66 of the exemption notification No.12/2017 in so far as it relates to demanding GST on affiliation fee.

 

The University is also an educational institution and students of the University include students studying through affiliated colleges. Thus, the activities of the University, so far as it relates to levying of affiliation fees is exempt from GST. The Circular of October 11, 2024 in its application to the Goa University where it is clarified that the affiliation services by universities to colleges are not by way of services related to the admission of students to such college or the conduct of examinations by such colleges, is erroneous. The Supreme Court has observed in the decision –Bhartia Education Society v. State of H.P. – (2011) 4 SCC 527 in the context of NCTE Act, that “affiliation” enables and permits an institution to send its students to participate in the public examinations conducted by the examining body and secure the qualification in the nature of degrees, diplomas, certificates etc. In the judgment – Principal and Others v. Presiding Officer and Others – (1978) 1 SCC 498, the SC has observed the affiliation is meant to prepare and present students for public examination. In the Court’s view, affiliation is essentially an activity relating to admission and examination of students and hence the Circular of October 11, 2024, in its application to the petitioner-Universityis contrary to the settled legal position.

 

The Circular cannot takeaway the effect of the notificationstatutorily issued. The respondents cannot whittle down the exemption notification and restrict the scope of theexemption notification by issuinga Circular, whereby a new condition is sought to be incorporatedthereby restricting the scope of theexemption notification or whittling it down. The HC has statedthat it has examined the Circularsin their application to the petitioner-University. Moreover, theshow cause notice was issued onthe premise that the inspectionand affiliation fees are not a partof the notification of 2017 granting exemption. For payment of GST, the activity has to qualify the test of liability of GST.The amounts chargeable to tax arise on supply of goodsor services or both and in theabsence of this, the show causenotice would be bad on jurisdictional facts. GST was demandedwithout establishing as to howthese incomes would be liable toGST. The GST was on sale ofprospectus, sale off old newspaper, various fees towards sports,eligibility certificate, migrationcertificate, admission fees etc.received from the students arealso accounted for making thedemand of tax.