2023 (11) TMI 49 - HC - GST

Exemption from GST on Education services - demand of GST on affiliation fee and inspection fee together with arrears from July 2017 onwards - HELD THAT - On reading of the provisions of G.S.T. law the notification No. 11 of 2017 dated 28.06.2017 emphatically holds education service to be one which is liable to tax. The relaxations granted vide Notification No. 12 of 2017 is confined to the services rendered by the educational institutions to the students faculty and staff. It also grants exemption in respect of collection of fees relating to entrance examination and other fees chargeable from the students for admission or any such purpose. The fact that the Notification No. 11 of 2017 dated 28.06.2017 has a broader subject when it prescribes education service and Notification No. 12 of 2017 dated 28.06.2017 specifically enumerates specific services which stand exempted and inspection and affiliation fees not reflected in the Notification No. 12 of 2017 dated 28.06.2017 the relief sought for by the petitioners or the issue raised by the petitioners would not be sustainable - Notification No. 12 of 2017 dated 28.06.2017 which stood amended further vide Notification No. 2 of 2018 dated 25.01.2018 specifically enumerates the specific nature of service rendered by the educational institutions which would stand exempted. Inspection and affiliation fees however is not part of the said notification granting exemption. There are no substance in the contentions raised by the learned counsel for the petitioners - petition dismissed.

Summary

Issues Involved:
1. Legality of the demand notice for GST on affiliation and inspection fees.
2. Applicability of GST exemption notifications to the services provided by educational institutions.

Summary:

Issue 1: Legality of the demand notice for GST on affiliation and inspection fees

The batch of writ petitions was filed by educational institutions challenging the demand notice issued by the 1st respondent-University for the payment of GST on affiliation and inspection fees, including arrears from July 2017 onwards. The demand notice was based on directions from GST authorities to collect and deposit GST dues on these fees. The petitioners argued that the affiliation and inspection fees should be exempt from GST under certain notifications.

Issue 2: Applicability of GST exemption notifications to the services provided by educational institutions

The petitioners relied on Notification No. 12 of 2017, dated 28.06.2017, which exempts certain services provided by educational institutions from GST. They contended that the term "educational institution" includes universities and that affiliation and inspection fees should be exempt as they are part of the educational services. They also cited amendments and decisions from other courts supporting their claim.

The respondents argued that the demand notice was valid and that affiliation and inspection fees are taxable under GST law. They referred to Notification No. 11 of 2017, which includes "Education services" as taxable, and pointed out that the exemption in Notification No. 12 of 2017 does not explicitly cover affiliation and inspection fees.

The court examined the relevant notifications and concluded that educational services are taxable under Notification No. 11 of 2017. Notification No. 12 of 2017 provides exemptions for specific services rendered to students, faculty, and staff but does not include affiliation and inspection fees. The court also noted that the GST Council had clarified that services like accreditation are taxable at 18%.

The court rejected the petitioners' reliance on decisions from the Karnataka High Court, noting that those decisions were based on provisions of the Finance Act, 1994, which are not applicable under the GST law.

Conclusion:

The court dismissed the writ petitions, holding that the affiliation and inspection fees charged by the 1st respondent-University are not exempt from GST. The demand notice for GST on these fees was upheld as valid. The court emphasized that exemptions must be explicitly stated in the notifications, and in the absence of such specific exemptions for affiliation and inspection fees, the petitioners' claims were not sustainable.