Principal, Dayanand College vs. Union Of INDIA

Held

The Court held that the grant of affiliation by a University is a statutory and regulatory function and does not constitute a "supply of service" under Section 7 of the CGST Act, as it is not carried out in the course or furtherance of business. Affiliation fees were determined not to be "consideration" for any taxable activity due to the compulsory nature of affiliation and the absence of quid pro quo. Furthermore, the Court found that affiliation services are exempt under Entry 66(a) and 66(b)(iv) of Notification No. 12/2017-CT (Rate), as they are inseparably connected with the core educational functions of curriculum approval, student admission, examination conduct, and degree conferment. The levy and collection of GST on affiliation fees were deemed illegal and unsustainable. The Court disposed of the writ petition in terms of its prior judgment in Rajasthan Technical University v. Union of India, which quashed similar demands and directed refunds of any GST already paid, subject to verification that the burden was not passed on to students.

Facts

The petitioner, Principal of Dayanand College, challenged an order dated 08.07.2026 passed by Respondent No. 4, the Director Education. This order directed the petitioner to deposit Goods and Services Tax (GST) on the affiliation fee as a prerequisite for the renewal of affiliation for the academic session 2025-2026. The petitioner argued that the demand for GST on affiliation fees was legally unsustainable, asserting that affiliation does not constitute a taxable service. The respondents are the Union of India, the State of Rajasthan, the Principal Chief Commissioner of Central Goods and Services Tax, and the Director Education.

Key Issues

1. Whether the grant of affiliation by a university constitutes a "supply of service" under Section 7 of the CGST Act, considering the activity is carried out in the course or furtherance of business? The petitioner contended that affiliation is a statutory function enabling the university to impart education and does not equate to trade or commerce. The revenue did not record specific arguments on this point, but the court's prior judgment addressed it. 2. Whether affiliation fees constitute "consideration" for a taxable supply? The petitioner argued that affiliation is compulsory, lacking choice or bargaining, and the fee is a statutory levy without quid pro quo. 3. Whether exemption under Entry 66 of Notification No. 12/2017-CT (Rate) is applicable to affiliation services? The petitioner contended that affiliation is intrinsically linked to educational delivery, including curriculum approval and examination conduct, thus falling under the exemption. The revenue's stance on these issues is implicitly addressed by the court's reliance on a previous judgment.