S.R.M. Institute Of Medical Sciences And Technology vs. Kaloji Narayana Rao University Of Health Sciences

Facts

The petitioners, various nursing colleges, filed writ petitions challenging 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 Goods and Services Tax (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 to declare these notices illegal and arbitrary, and to stay further proceedings. The respondents included KNRUHS, the Central Board of Indirect Taxes and Customs, and the Directorate General of GST Intelligence.

Held

The High Court held that Notification No. 12/2017 dated 28.06.2017 cannot be made applicable to the inspection and affiliation fees charged by the first respondent-University. The Court found that these fees have not been specifically exempted in terms of the Constitution Bench judgment in M/s. Dilip Kumar and Company (6 supra), and therefore, the benefit of exemption cannot be extended to the petitioners. Regarding the Karnataka High Court decisions, the Court respectfully disagreed, stating that those judgments relied on provisions of the Finance Act, 1994 (Clause 66D), which had been omitted by the Finance Act, 2016, and that GST law does not contain a similar provision (Sub-Clause (11) of Clause 66D). Consequently, the Court found no substance in the contentions raised by the petitioners. The writ petitions were dismissed.

Key Issues

1. Whether Notification No. 12/2017 dated 28.06.2017, concerning GST exemptions, is applicable to inspection and affiliation fees charged by KNRUHS to educational institutions? 2. Whether inspection and affiliation fees charged by KNRUHS are specifically exempted under GST law, considering the principles laid down in M/s. Dilip Kumar and Company (6 supra)? 3. Whether the decisions of the Karnataka High Court in M/s. Rajiv Gandhi University of Health Sciences (1 supra) and M/s. Bangalore University (2 supra) are applicable to the present case? Petitioner's Arguments: The petitioners contended that the inspection and affiliation fees charged by KNRUHS were not subject to GST. They relied on the Karnataka High Court judgments which, according to them, held such fees to be exempt. They argued that the demand notices were illegal and arbitrary. Revenue's Arguments: The revenue department argued that Notification No. 12/2017 was not applicable to the fees in question. They further argued that these fees were not specifically exempted under GST law, and the principle of strict construction of exemption provisions should apply. They also contended that the Karnataka High Court decisions were distinguishable as they relied on provisions of the Finance Act, 1994, which were either omitted or not present in GST law.