Anupama Medical Training Institute (College Of Nursing) 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 reasoned that affiliation is a compulsory statutory function enabling the university to discharge its mandate of imparting education, and applying the doctrine of ejusdem generis to Section 2(17) of the CGST Act, affiliation cannot be equated with trade, commerce, or any activity of a commercial character. Consequently, affiliation fees were held not to be 'consideration' as there was no element of choice, bargaining, or reciprocity, and the fee was a statutory levy without quid pro quo. Furthermore, even if considered a service, affiliation is inseparably connected with core educational activities like curriculum approval, examinations, and degree conferment. The Court held that Entry 66 of Notification No. 12/2017-CT (Rate) must be interpreted purposively to cover services forming the backbone of educational delivery, including affiliation. The levy of GST on affiliation fees was deemed an indirect taxation of education, which is impermissible and without the authority of law. The Court quashed the impugned show cause notices and directed the refund of any GST already paid by 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 challenged the levy of Goods and Services Tax (GST) on affiliation fees charged by these universities. The petitions were filed before the Rajasthan High Court. The core of the dispute revolved around whether the grant of affiliation by a university to its colleges constitutes a 'supply of service' under the GST Act and whether the associated fees are 'consideration' for such a supply, making them liable for GST. The petitioners argued that affiliation is a statutory and regulatory function, not a commercial activity.

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, considering the requirement of an activity being carried out in the course or furtherance of business. 2. Whether the affiliation fees charged by universities to affiliated colleges qualify as 'consideration' for a supply of service, requiring the presence of quid pro quo and voluntariness. 3. Whether services related to affiliation are exempt from GST under Entry 66 of Notification No. 12/2017-CT (Rate), which exempts services relating to education. 4. Whether the levy of GST on affiliation fees is valid, considering existing circulars and the nature of educational services. Petitioner's arguments: The petitioners contended that affiliation is a statutory and regulatory function, not a commercial activity, and therefore not a 'supply' under Section 7 of the CGST Act. They argued that affiliation fees are statutory levies without quid pro quo, thus not 'consideration'. They also asserted that affiliation services are inherently linked to educational delivery and thus exempt under Entry 66 of Notification No. 12/2017-CT (Rate). They relied on the purposive interpretation of exemption notifications. Revenue's arguments: The judgment does not explicitly record arguments made by the revenue or state respondents.