Annpurna Medical Prashikshan Sansthan vs. Rajasthan University Of Health Sciences

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. It was reasoned that affiliation is not an activity in the course or furtherance of business, nor does it equate to trade or commerce. Consequently, affiliation fees were held not to constitute 'consideration' as there was no element of choice, bargaining, or reciprocity, and the fees were statutory levies without quid pro quo. Furthermore, even if considered a service, it is inseparably connected with core educational activities and falls within the ambit of exemption under Entry 66 of Notification No. 12/2017-CT (Rate). The levy and collection of GST on affiliation fees were deemed illegal and unsustainable. The Court quashed the impugned show cause notices and directed the refund of any GST already paid by the petitioners, provided the burden was not passed on to students.

Facts

The petitioners are educational institutions affiliated with the Rajasthan University of Health Sciences and/or Rajasthan Technical University. They are challenging the levy of Goods and Services Tax (GST) on the affiliation fees charged by these universities. The petitioners argue that granting affiliation is a statutory function, not a commercial supply, and the fees are statutory levies, not consideration for a service. The revenue authorities contend that affiliation constitutes a supply of service and is taxable. The petitions were filed seeking to quash show cause notices and demands for GST on affiliation fees.

Key Issues

1. Whether the grant of affiliation by a university to its affiliated colleges constitutes a 'supply of service' under Section 7 of the CGST Act. The petitioners argue that affiliation is a statutory and regulatory function, not an activity in the course or furtherance of business, and therefore not a supply. The revenue contends it is a service. 2. Whether affiliation fees constitute 'consideration' for a supply of service. The petitioners argue that as affiliation is compulsory and lacks quid pro quo, the fees are statutory levies, not consideration. The revenue argues the fees are consideration for the service of affiliation. 3. Whether services related to affiliation are exempt under Entry 66 of Notification No. 12/2017-CT (Rate). The petitioners contend that affiliation is integral to educational delivery and falls under the exemption. The revenue's stance on this is not explicitly detailed but implied by their attempt to levy GST.