Facts of the Case:
In this case, the petitioner approached the High Court challenging a series of adjudication orders, show cause notices, CBIC circulars, and GST Notifications issued under Section 168A of the CGST/KGST Acts.
The petitioner contended that their activities are statutory/regulatory in nature, undertaken under the governing University Acts. Such activities are not “business” and do not constitute “supply” for consideration. Even otherwise, they are covered by the education exemption, being services by an educational institution. Activities such as affiliation fee, registration fee, admission fee, convocation fee, etc., are statutory functions forming part of the education ecosystem, not commercial supplies. The adjudication orders and SCNs were contrary to law and contrary to the ruling in Goa University v. Joint Commissioner of CGST. The GST notifications issued under Section 168A were ultra vires, as held by multiple High Courts.
The petitioner relied heavily on the Karnataka High Court decision in M/s Bengaluru North University v. Joint Commissioner of Central Tax dated 22.04.2025. which, in turn, relied on Goa University judgment holding that university activities are not commercial and not exigible to GST.
Issue:
Whether the activities of Universities are “commercial” and constitute “supply” in the course or furtherance of “business” under Sections 7 and 2(17) of the CGST Act? Whether activities incidental or ancillary to education (affiliation, examination, registration, convocation, etc.) constitute “business”? Whether Universities are carrying out statutory and regulatory functions not amenable to GST?
Held that:
Activities of Universities are not commercial and do NOT constitute “supply” in the course or furtherance of business – The Court held that GST is a tax on commercial activities. The dominant function of a University is imparting education, which is neither commercial nor business. Activities such as affiliation, examination, registration, issuance of certificates, and convocation are integral to educational regulation and cannot be treated as independent business transactions.
Education-related functions are statutory and regulatory, not taxable – The University is a creature of statute performing duties assigned by the State Legislature. Hence, fees collected are statutory levies, not consideration for commercial services. The concept of “any other similar activity” in Section 2(17) relates only to wager, not education; hence education does not fall within business definition.
University fees do not constitute “consideration” under GST – Statutory fees paid for regulatory functions lack the nexus of quid pro quo necessary for consideration. Such fees are not for any “commercial supply” and therefore not taxable.
Entry 66 of Notification No. 12/2017-CT (Rate) applies – The Court confirmed that services provided by an educational institution relating to admission, conduct of examinations, issuance of certificates, are exempt from GST, and University functions fall squarely within this entry.
Circulars Dated 17.06.2021 and 11.10.2024 Declared Invalid – The Court held that the Circulars incorrectly assume that affiliation activities constitute a taxable supply; contradict statutory provisions of Sections 7 and 9; override and restrict the scope of Notification 12/2017, which is impermissible; introduce new conditions not present in the exemption notification; ignore binding judicial precedents on exemption and nature of affiliation.
The High Court reaffirmed the legal principle that Universities are educational and statutory bodies, not commercial establishments. Their core and incidental functions—including affiliation, examination, registration, and administration—do not fall within the GST net. Notifications issued under Section 168A extending limitation were held invalid, and all SCNs/orders based on them were set aside.
Case Name: M/s. Rani Channamma University Versus Commercial Tax Officer, (Enforcement) North Zone Belagavi Belgaum, Union of India, State of Karnataka, Assistant Commissioner of Commercial Taxes, (Enforcement). Gokak., Deputy Commissioner of Commercial Taxes (Aduit-2) Belagavi, Central Board of Indirect Taxes And Customs, New Delhi, Goods And Services Tax Council, New Delhi. dated 24.11.2025
To read the complete judgement 2025 Taxo.online 3156
