Affiliation Charges Collected by Universities Taxable under GST: Madras HC [Read Order]
Services provided for inspection and grant of affiliation occur prior to admission and are independent of examination functions. Therefore, it cannot be read into the exemption clause by extended interpretation.
The Madurai bench of Madras High Court has held that affiliation fees collected by universities from affiliated colleges are taxable under GST ( Goods and Services ).
It held that the charges do not qualify for exemption as educational services relating to admission or conduct of examinations.
A batch of writ petitions were filed by Bharathidasan University challenging GST show cause notices issued under Section 74(5) for multiple assessment years.
According to the University, affiliation and related fees were exempt under Notification No. 12/2017-CTR as services provided by an educational institution. It depended on earlier single-judge decisions that took a broader view of educational exemptions.
The matter was referred to the Division Bench due to conflicting judicial opinions within the High Court.
The University’s counsel, Adv. V.R.Shanmuganathan argued that affiliation is integrally connected with admission and examination functions, since colleges cannot admit students or present them for exams without university affiliation.
The GST department contended that affiliation is a distinct regulatory and supervisory function given to institutions and not a direct service to students, faculty, or staff, and therefore falls outside the exemption entry.
The Court examined the exemption under Notification No. 12/2017 and said that exemption entries in taxing statutes must be strictly construed. It noted that the notification exempts only specific categories of services such as services by an educational institution to students, faculty and staff, and services relating to admission or conduct of examination.
The court also referred to the later GST Council clarification and CBIC Circular dated 11.10.2024 stating that affiliation services provided by boards or similar bodies are not services relating to admission or examination and are taxable, except where specifically exempted for government schools.
The Bench of Dr. Justice G. Jayachandran and Justice K.K. Ramakrishnan held that services provided for inspection and grant of affiliation occur prior to admission and are independent of examination functions. Therefore, it cannot be read into the exemption clause by extended interpretation.
The division bench concluded that “we hold that the view expressed in the subsequent judgment namely, Pondichery University's case declares the correct legal position, since the affiliation fee collected by the Universities does not fall within exemption. Accordingly, the fee collected by the University from the Colleges as affiliation fees is amenable for levy of GST.”
The matter was sent back to the Single Judge to decide the case on other grounds, if any.
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