Facts of the Case

Bundelkhand University filed a writ petition before the Allahabad High Court challenging two Show Cause Notices dated 30.07.2022 and 17.08.2022, whereby GST liability was proposed on the affiliation fees collected by the University from affiliated colleges.

The University contended that affiliation fees charged by a State University form part of educational activities and are exempt from GST as fees connected with imparting education.

Instead of responding before the adjudicating authority, the petitioner directly approached the High Court seeking quashing of the Show Cause Notices.

Issues Involved

  1. Whether GST is leviable on affiliation fees collected by a State University from affiliated colleges.
  2. Whether affiliation fees qualify for exemption as fees relating to imparting education under the GST law.
  3. Whether the High Court should entertain a writ petition directly against Show Cause Notices without permitting adjudication by the competent authority.

Petitioner’s Arguments

  • The petitioner submitted that no GST could be levied on affiliation fees collected from colleges.
  • It was argued that such affiliation fees are intrinsically connected with imparting education and therefore qualify for exemption under the GST regime applicable to educational institutions.
  • On this basis, the petitioner sought interference by the High Court against the impugned Show Cause Notices.

Respondent’s Arguments

  • Although detailed submissions were not recorded in the order, the respondents opposed interference at the Show Cause Notice stage.
  • The respondents maintained that the petitioner should submit its reply before the competent GST authority, which is empowered to examine all legal and factual issues relating to the proposed GST demand.

Court Order / Findings

The Allahabad High Court held that the impugned notices were merely Show Cause Notices and no final determination of tax liability had yet been made.

The Court observed that all contentions regarding exemption from GST on affiliation fees could appropriately be raised before the competent adjudicating authority in response to the notices.

Since an effective statutory remedy was available during adjudication, the Court declined to exercise its extraordinary writ jurisdiction under Article 226.

Accordingly, the writ petition was dismissed at the threshold, leaving it open to the petitioner to raise all legal objections before the competent authority.

Important Clarification

  • Mere issuance of a Show Cause Notice does not ordinarily warrant interference by the High Court under Article 226.
  • Questions relating to GST exemption on affiliation fees should first be adjudicated by the competent GST authority.
  • Educational institutions challenging proposed GST demands are expected to participate in statutory adjudication before invoking writ jurisdiction.
  • The judgment does not decide whether affiliation fees are actually exempt from GST; it merely holds that the issue should first be examined by the adjudicating authority.

Key Takeaway

The Allahabad High Court reaffirmed the settled principle that writ jurisdiction should generally not be exercised against mere Show Cause Notices where an effective statutory adjudicatory mechanism exists. Issues regarding GST liability or exemption on affiliation fees charged by State Universities must first be raised before the competent GST authority.

Sections  Involved

  • Section 73 of the Central Goods and Services Tax Act, 2017 (Proceedings pursuant to Show Cause Notice)
  • Provisions relating to exemption of educational services under the Goods and Services Tax law
  • Article 226 of the Constitution of India – Writ Jurisdiction
  • GST exemption notifications relating to educational institutions (issue involved)\

Link to download the order - https://mytaxexpert.co.in/uploads/1782968668_226compressed.pdf

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