High court rules Goa University’s affiliation fees are ‘GST-free’

Panaji: The high court of Bombay at Goa has held that the affiliation fees collected by the Goa University from its affiliated colleges are exempt from the GST as its activities are not commercial.
The division bench, comprising Justices M S Karnik and Nivedita Mehta, quashed and set aside a show cause notice by the joint commissioner of central goods and service tax proposing to demand GST from the GU on the affiliation fees.
The joint commissioner had called upon the GU to show cause as to why GST of Rs 4.84 crore on the taxable value of Rs. 27.45 crore should not be demanded and recovered from the university along with interest and penalty.
“…where the main and dominant activity of the University is education, it cannot be termed as business activity to demand tax,” the court said.
Incomes such as rent or licence fees received from teachers or staff are clearly exempt from tax as they are residential in nature and are services rendered to faculty, the high court said. With regard to rent received from third parties towards setting up kiosks and others, GST has already been remitted and reported in the returns, the court said.
“The university has reported income in the income and expenditure account, and its schedules and sub-schedules have been listed. The GST is demanded on the same without establishing how these incomes would be liable to GST,” the high court said. “The GST is proposed on the sale of prospectus, sale of old newspapers, various fees towards sports, eligibility certificate, migration certificate, admission fee, etc, received from students are also taken for the purpose of demand.”
The high court observed that without affiliation from the Goa University, the affiliated colleges are not permitted to admit students for courses. It is based on this affiliation that colleges conduct courses, examinations and award degrees to students.
“Further, the examination is conducted by the Goa University, which in turn leads to the award of degrees to the students. Hence, the fees collected from colleges are clearly covered by the exemption notification. The activity of Goa University in collecting the affiliation fees is exempt from GST, and hence the fees collected by the Goa University are not liable to tax,” the high court stated.
The university has granted affiliation to around 67 colleges. The Goa University went to the high court challenging the show cause notice by the joint commissioner of central goods and service tax proposing to demand GST on its educational activities.