Facts of the Case: 

In this case, the petitioner is a statutory university established under the Maharashtra Public Universities Act, 2016, was subjected to GST demand under Section 74 of the CGST Act on affiliation fees collected from colleges for the period 2017–18 to 2022–23. The department issued a show cause notice alleging that such collection constituted “supply” liable to GST under Section 7 of the CGST Act read with Section 9 of the CGST Act. The petitioner contended that affiliation is a statutory function essential to regulation of education, not a commercial activity, and hence falls outside the ambit of GST.

It was further argued that such activities are either not “supply” or are otherwise exempt under Notification No. 12/2017-CT (Rate). The adjudicating authority rejected these contentions and confirmed the demand along with interest and penalty, which was followed by rejection of a rectification application.

Aggrieved, the petitioner approached the High Court challenging the jurisdiction, taxability, and reliance on CBIC circulars.

Issue: Whether affiliation fees collected by a statutory university from colleges constitute a “supply of service” in the course or furtherance of business under Section 7 of the CGST Act, thereby attracting GST under Section 9. Further, whether such fees qualify as “consideration,” whether exemption under educational services applies, and whether the department had jurisdiction to initiate proceedings under Section 74.

Held That:

The Court undertook a detailed examination of the statutory scheme governing the University under the Maharashtra Public Universities Act, 2016 and held that grant of affiliation to colleges is a statutory and regulatory function, intrinsically connected with the larger objective of imparting and regulating education. Such activity is neither commercial nor undertaken in the course or furtherance of “business.” The Court rejected the Revenue’s contention that the wide definition of “business” under the CGST Act would include such activities, holding that the term must be interpreted in context and cannot extend to sovereign/statutory educational functions.

It was further held that affiliation fees do not constitute “consideration” as understood under GST law. The Court emphasized the absence of any quid pro quo or contractual relationship that affiliation is mandatory for colleges and flows from statutory obligations, not from any voluntary commercial arrangement. Therefore, the essential ingredients of a taxable supply i.e. business and consideration were found to be missing.

On this basis, the Court concluded that affiliation activities do not amount to “supply”, and consequently, the charging provision under Section 9 cannot be invoked. As a direct corollary, the assumption of jurisdiction by the department under Section 74 of the CGST Act was held to be fundamentally flawed, since no taxable event existed in the first place.

The Court categorically held that the impugned demand of GST on affiliation fees collected by the petitioner–University is wholly without jurisdiction and unsustainable in law. The Court observed that the foundational requirement for levy of GST i.e. existence of a “supply” under Section 7 of the CGST Act read with levy under Section 9 of the CGST Act was not satisfied in the present case.

The Court also endorsed and followed established judicial precedents, including Goa University v. Joint Commissioner of CGST, Rajiv Gandhi University of Health Sciences case, and Rajasthan Technical University v. Union of India, all of which consistently held that affiliation fees collected by universities are statutory in nature and not amenable to GST. The Court noted that these decisions have attained finality and ought to have been followed by the tax authorities.

Additionally, the Court observed that even assuming (without admitting) that such activity could be treated as a service, it would still fall within the ambit of exempt educational services under Notification No. 12/2017-CT (Rate). It reiterated that executive circulars cannot override statutory provisions or exemption notifications, and any such circular contrary to law would have no binding force.

Case Name: University of Mumbai Versus Union of India & Ors. dated 27.04.2026

To read the complete judgement 2026 Taxo.online 1092