Telangana HC: Affiliation and Inspection Fees Not Covered under GST Exemption for Educational Institutions

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Published on: November 19, 2023 at 00:05 IST

The Telangana High Court clarified that the GST (Goods and Services Tax) exemption provided under Notification No.12 of 2017 does not extend to cover affiliation fees and inspection fees paid by colleges to universities.

The decision came in response to a batch of writs filed against a demand notice issued by the Kaloji Narayana Rao University of Health Sciences, directing various colleges to pay 9% SGST (State Goods and Services Tax) and 9% CGST (Central Goods and Services Tax), totaling 18% GST, on affiliation and inspection fees from 2017 onwards.

The Division Bench, comprising Justice Sam Koshy and Justice Laxmi Narayana Alishetty, emphasized that the 2017 notification only grants exemption for services provided to students, faculty, and staff, and does not encompass services rendered by universities to educational institutions, such as affiliation and inspection.

The court rejected the argument that the GST Act’s definition of “educational institutions” includes universities, highlighting that the notification specifically exempts services and fees listed therein.

The court also dismissed the claim that the burden of GST would be passed on to students, stating that affiliation and inspection fees are paid at the inception of the college, before students are admitted.

The standing counsel for Commercial Tax Authorities, Advocate Dominic Ferdandes, argued that a plain reading of the 2017 notification makes it clear that affiliation and inspection fees are not exempted.

Additionally, he referred to the 47th GST Council Meeting, which resolved that the notification does not apply to the affiliation of educational institutions with universities and boards.

The court was also informed that a circular issued by the Government of India in 2021 specified GST at 18% for services related to accreditation of educational institutions by boards or universities.

The court noted that the judgments relied upon by the petitioners were not applicable, as they were based on a clause that had been omitted since 2016.

The bench concluded that unless specific exemption is granted for inspection and affiliation fees, the petitioners cannot claim exemption based on inferences from the 2017 notification.

It further highlighted that the subsequent amendment in 2018 did not include affiliation fees in the list of exempted services.

Consequently, the court dismissed the writ petitions filed by the colleges, stating, “For all the aforesaid reasons, we do not find any substance in the contentions raised by the learned counsel for the petitioners. Accordingly, the Writ Petition No.34617 of 2022 stands dismissed. Consequently, all the connected writ petitions also stand dismissed. No costs.”

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