Chandana College Of Nursing vs. Kaloji Narayana Rao University Of Health Sciences

Facts

The petitioners, various nursing colleges, challenged demand notices issued by the Kaloji Narayana Rao University of Health Sciences (KNRUHS) for inspection and affiliation fees. The petitioners argued that these fees were not subject to GST. The demand notices were dated February 26, 2022, and August 24, 2022, for WP No. 34617 of 2022, and August 18, 2023, and September 13, 2023, for other connected writ petitions. The petitioners sought a writ of mandamus to declare these notices illegal and arbitrary. The respondents included KNRUHS, the Central Board of Indirect Taxes and Customs, the Directorate General of GST Intelligence, and the Commissioner of Commercial Taxes, Government of Telangana.

Held

The Court held that Notification No. 12/2017-Central Tax (Rate), dated June 28, 2017, cannot be made applicable to the inspection and affiliation fees charged by the first respondent-University. The Court found that these fees were not specifically exempted under GST law, referencing the constitutional bench judgment in M/s. Dilip Kumar and Company. The Court also respectfully disagreed with the view taken by the Karnataka High Court in the cited cases, noting that those decisions relied on provisions of the Finance Act, 1994, which had been omitted and that the GST law lacks equivalent provisions. Therefore, the Court concluded that the benefit of exemption could not be extended to the petitioners. The Court found no substance in the contentions raised by the petitioners.

Key Issues

1. Whether Notification No. 12/2017-Central Tax (Rate), dated June 28, 2017, is applicable to inspection and affiliation fees charged by the first respondent-University from educational institutions. 2. Whether the inspection and affiliation fees charged by the first respondent-University are specifically exempted under GST law, considering the principles laid down in constitutional bench judgments. Petitioner's arguments: The petitioners contended that the fees charged were for educational services and were exempt from GST. They relied on decisions from the Karnataka High Court in M/s. Rajiv Gandhi University of Health Sciences and M/s. Bangalore University, which they argued supported their claim for exemption based on provisions of the Finance Act, 1994. Revenue's arguments: The revenue department argued that Notification No. 12/2017-Central Tax (Rate) is not applicable to the fees in question. They further contended that the Karnataka High Court decisions were based on provisions of the Finance Act, 1994, which were omitted and that the GST law does not contain similar provisions. They emphasized that any exemption must be clearly established and that ambiguity in exemption notifications should benefit the State, not the assessee.