M/S Rashtreeya Sikshana Samithi Trust vs. Assistant Commissioner Of Commercial Taxes

Held

The Court held that the respondent authority, notwithstanding the audit report, must consider the petitioner's case on its own merits. The Court clarified that the 'Development Fee', collected as envisaged under the Consensual Agreement, is not exigible to tax and is exempted by the Exemption Notification dated 28.06.2017. The respondent must examine the petitioner's contentions regarding the taxability and exemption of the 'Development Fee' without prejudging the issue based on the audit report's conclusions. The petition was disposed of with this clarification, emphasizing that the respondent should consider the petitioner's arguments on their own strength. The Court did not decide on the specific amount in dispute or the procedural history beyond the issuance of the show cause notice and the audit report.

Facts

The petitioner, M/s Rashtreeya Sikshana Samithi Trust, filed a writ petition challenging a show cause notice dated 29.09.2023, issued by the Assistant Commissioner of Commercial Taxes (Audit)-3.10 DGSTO-3, for the financial year 2017-18. The notice proposed to tax the 'Development Fee' collected by the petitioner from students admitted under Management and NRI quotas. This fee, collected as per a Consensual Agreement between the Government of Karnataka and the Karnataka Unaided Private Engineering Colleges Association, is used to provide scholarships. The petitioner argued that this fee is surplus and covered under an Exemption Notification dated 28.06.2017. Furthermore, the petitioner contended that the show cause notice was issued based on conclusions in an audit report (Form GST ADT-02) under Section 65(6) of the CGST/KGST Act, indicating predetermination of liability by the respondent authority.

Key Issues

1. Whether the 'Development Fee' collected by the petitioner is exigible to tax under the CGST/KGST Act, 2017, or if it is covered under the Exemption Notification dated 28.06.2017? (Question of law) 2. Whether the issuance of the show cause notice, based on the conclusions of an audit report under Section 65(6) of the CGST/KGST Act, demonstrates predetermination of the petitioner's liability by the respondent authority? (Question of mixed law and fact) Petitioner's Arguments: The petitioner argued that the 'Development Fee' collected is not taxable as it is surplus and falls under the Exemption Notification dated 28.06.2017. They also contended that the show cause notice was issued due to predetermination of liability, as it was based on the conclusions of an audit report prepared by the respondent authority, referencing Section 65(6) of the CGST/KGST Act.