GST Applicability on University Affiliation Charges: Judicial Analysis

The Madras High Court delivered a significant ruling in the matter of Bharathidasan University Vs Joint Commissioner of GST (ST-Intelligence), resolving the controversy surrounding the taxability of affiliation charges levied by universities on affiliated colleges under the Goods and Services Tax regime.

Background of the Dispute

The present matter originated when multiple writ petitions were filed challenging notices issued under Section 74(5) of Tamil Nadu Goods and Services Tax Act, 2017. The Joint Commissioner (ST-Intelligence), Trichy Division, had issued separate intimations of liability for consecutive assessment periods spanning 2019-2020 through 2022-2023, demanding payment of tax along with 18% interest and applicable penalties.

The core legal controversy centered on whether universities are required to collect and remit GST on affiliation charges obtained from educational institutions seeking recognition and permission to operate under their academic umbrella.

Rival Contentions Before the Court

Position of the Revenue Department

The tax authorities maintained that affiliation charges fall outside the exemption framework because such fees do not constitute services rendered directly to students regarding their enrollment or examination processes. The department emphasized that the exemption provisions must be interpreted strictly, particularly in the context of fiscal statutes.

According to the revenue's interpretation, the service of granting affiliation to colleges operates at an institutional level, distinct from student-facing services that involve actual admission procedures or examination conduct. Therefore, notification No.12/2017 dated 28.06.2017 would not extend its protective cover to such charges.

University's Arguments

Bharathidasan University contended that the affiliation charges represent consideration for services rendered to educational establishments that subsequently admit students and organize examinations for courses recognized under applicable legal provisions. The university argued that since these services ultimately facilitate the educational process, they merit exemption from GST liability under notification No.12/2017 dated 28.06.2017.

The institution emphasized that without proper affiliation, colleges cannot legally admit students or conduct recognized examinations, thereby establishing a direct nexus between affiliation services and the core educational functions exempted under the notification.

Judicial Divergence Necessitating Reference

The learned Single Judge, upon examining the matter, discovered conflicting opinions rendered by coordinate benches of the same court, necessitating a reference to the Division Bench for an authoritative pronouncement.

First Judicial View - Expansive Interpretation

Honourable Mr. Justice R. Sureshkumar, in W.P.(MD) No.20502 of 2019 (Madurai Kamaraj University vs Joint Commissioner) dated 16.08.2021 and W.P.(MD) No.8353 of 2019 (Bharathidasan University vs Joint Commissioner of GST and Central Excise) dated 21.09.2021, adopted a purposive interpretation approach.

His Lordship reasoned that when examination conduct qualifies as an exempted service relating to educational institutions, the act of granting affiliation—which enables colleges to conduct such examinations—should similarly receive exemption. The judgment criticized narrow interpretations that would undermine the legislative intent behind providing tax relief to educational services.

The learned Judge emphasized that the term "Educational Institutions" encompasses not merely affiliated colleges but also the affiliating universities themselves, thereby bringing affiliation services within the exemption's ambit.

Second Judicial View - Restrictive Reading

Conversely, Honourable Mr. Justice C. Saravanan delivered judgments in W.P.(MD) No.19587 of 2021 (Manonmaniam Sundaranar University vs The Union of India and others), W.P.No.15333 of 2020 [Pondicherry University, rep by its Registrar (I/c) vs The Joint Commissioner of GST, Central Excise, Pondicherry] dated 12.10.2023 reported in 2024 (121) GSTR 321, and Sree Ramu College of Arts and Science vs Authority for clarification and Advance Ruling reported in (2024) 14 Centax 218 (Mad), which adopted a contrary stance.

These judgments held that affiliation services fall outside the exemption framework. The Pondicherry University judgment specifically distinguished the Madurai Kamaraj University precedent, concluding that unambiguous notification language leaves no scope for interpretative expansion.

In the Sree Ramu College matter, His Lordship explicitly recorded that deletion of "up to Higher Secondary" from entry 66(b)(iv) to notification No.12/2017-CT (Rate), dated February 28, 2017 through notification No.2/2018-CT (Rate), dated January 25, 2018 did not imply that affiliation services to constituent colleges obtained exemption status.

The judgment categorically stated: "There is no ambiguity in the language in entry (b)(iv) to entry 66 to Notification No.12/2017-CT (Rate), dated June 28, 2017 as amended by Notification No.2/2018-CT dated January 25, 2018. Entry (b)(iv) to entry 66 to Notification No.12/2017-CT (Rate) dated June 28, 2017 as amended by Notification No.2/2018-CT, dated January 25, 2018 is applicable only for services relating to examination or conduct of examination by the petitioner colleges in W.P.No.11038 of 2022 and W.P.No.5967 of 2023 and not to work relating to affiliation."

Comparative Judicial Analysis from Other High Courts

Bombay High Court Perspective

The Division Bench of the Bombay High Court in Goa University Vs. Joint Commissioner of Central Goods and Service Tax reported in [2025 173 taxmann.com 562 (Bombay)] adopted a different analytical framework. The court examined the circular dated 17.06.2021 and subsequent clarification dated 11.10.2024 issued by the Ministry of Finance concerning notification No.12/2017, Central Tax (Rate), dated 28.06.2017.