M/S Visvesvaraya Technological University vs. Additional Director General
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The petitioner, Visvesvaraya Technological University, Belagavi, challenged two show cause notices. The first, dated March 29, 2018, was issued by the Additional Director General, Directorate General of GST Intelligence, demanding service tax of Rs. 2,29,84,152/- (inclusive of cesses) on a taxable value of Rs. 19,33,99,442/- for the period July 2012 to March 2017. The second, dated July 22, 2019, was issued by the Assistant Commissioner of Central Tax and Central Excise, demanding service tax of Rs. 10,90,142/- (inclusive of cesses) for the period April 2017 to June 2017. The petitioner contended that these demands were unjustified. The respondents are various GST intelligence and revenue authorities.
Held
The Court held that service tax cannot be levied on income accruing on account of affiliation. This finding was based on the decision of a division bench of the same High Court in the case of PRINCIPAL ADDITIONAL DIRECTOR GENERAL, DIRECTORATE GENERAL OF GST INTELLIGENCE, BENGALURU ZONE UNIT AND OTHERS VS. M/S.RAJIV GANDHI UNIVERSITY OF HEALTH SCIENCES. Consequently, the authorities were not justified in levying service tax on the income accruing from affiliation for the periods July 2012 to March 2017 and April 2017 to June 2017. The show cause notices issued by the authorities were therefore liable to be set aside. The Court quashed both show cause notices dated March 29, 2018, and July 22, 2019. The ratio decidendi is that income earned by an educational institution solely from affiliation is not subject to service tax.
Key Issues
1. Whether service tax can be levied on income accruing to the petitioner on account of affiliation during the period July 2012 to March 2017 and April 2017 to June 2017, under the relevant provisions of the Finance Act, 1994 (as applicable prior to GST) and the GST regime? The petitioner argued that the authorities were not justified in levying service tax on income derived from affiliation. The respondents, through their counsel, urged several contentions, but the judgment does not detail their specific arguments beyond the general assertion of justification for the levy. The Court noted that the issue was squarely covered by a previous division bench order of the same High Court.
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER Sri.Bhanu Murthy.J.S., learned counsel for the petitioner has appeared through video conferencing. Sri.Girish S.Hulmani., learned counsel for respondents 1 to 3 and 5 and Sri.M.B.Kanavi., learned CGSC for respondent No.4 have appeared in person.
The show cause notice dated 29.03.2018 issued by the first respondent vide Annexure-A and the show cause notice dated 22.07.2019 issued by the fifth respondent vide Annexure-S are called into question in this Writ Petition on several grounds as set out in the Memorandum of Writ Petition. NC: 2024:KHC-D:11990
Learned counsel for the respective parties urged several contentions. Heard the contentions and perused the Writ papers with utmost care.
Suffice it to note that a show cause notice was issued demanding service tax amounting to Rs.2,29,84,152/- (Rupees Two Crore Twenty-Nine Lakh Eighty Four Thousand One Hundred and Fifty-Two only) inclusive of cesses, for providing of taxable service during the period from July 2012 to March 2017 on the taxable value of Rs.19,33,99,442/- (Rupees Nineteen Crore Thirty-Three Lakh Ninety Nine Thousand Four Hundred and Forty-Two only) and another show cause notice was issued demanding service tax amounting to Rs.10,90,142/- (Rupees Ten Lakh Ninety Thousand One Hundred and Forty- Two only) (inclusive of cesses), for providing of taxable service during the period from April 2017 to June 2017. The issue is squarely covered by the order of the division bench of this Court in PRINCIPAL ADDITIONAL DIRECTOR GENERAL, DIRECTORATE GENERAL OF GST INTELLIGENCE, BENGALURU ZONE UNIT AND OTHERS VS. M/S.RAJIV GANDHI UNIVERSITY OF HEALTH SCIENCES in W.A.No.856/2022 disposed of on 30.07.2024. NC: 2024:KHC-D:11990 The division bench has held that service tax cannot be levied on the income accruing on account of affiliation. Hence, the authorities concerned are not justified in levying service tax on the income accruing on account of affiliation during the academic year July 2012 to March 2017 and April 2017 to June 2017. Therefore, the show cause notices issued by the authorities concerned are liable to be set aside. Accordingly, they are set aside.
The Writ of Certiorari is ordered. The show cause notice dated 29.03.2018 issued by the Additional Director General, Directorate General of GST Intelligence, Belagavi Zonal Unit, Belagavi - first respondent vide Annexure-A and also the show cause notice dated 22.07.2019 issued by the Assistant Commissioner of Central Tax and Central Excise, Belagavi City Division, Belagavi - fifth respondent vide Annexure-S are quashed.
Resultantly, the Writ Petition is allowed. (JYOTI MULIMANI) JUDGE TKN List No.: 3 Sl No.: 28
Reproduced from the public record of the Karnataka High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.