W.P.No.23535 of 2023 & batch

Facts of the Case

Jawaharlal Nehru Technological University Kakinada (JNTUK) and four other Andhra Pradesh state universities — Acharya Nagarjuna University, Adi Kavi Nannayya University, Vikrama Simhapuri University, and Krishna University — were each assessed to GST on affiliation fees and No Objection Certificate (NOC) fees collected from their affiliated colleges, on the footing that these constituted a taxable "supply of service." JNTUK's Order-in-Original dated 06.06.2023 demanded Rs.2,64,87,723 plus interest and penalty for the period 01.07.2017 to 31.03.2020, with parallel demands against the other universities for overlapping periods. All five universities, established under distinct Andhra Pradesh legislative enactments, jointly challenged their respective demand orders before the Andhra Pradesh High Court, which took up JNTUK's case as representative of the common controversy.

Issues Involved

  1. Whether grant of affiliation and issuance of NOCs by statutory universities constitutes "supply of service" under Section 7 of the GST Act.
  2. Whether such activity falls within the definition of "business" under Section 2(17), given it is a mandatory, non-discretionary statutory function rather than a voluntary commercial activity.
  3. Whether, alternatively, the universities were entitled to exemption under Entry 66 of Notification No.12/2017 or Entries 4 and 5 of the same notification as a "governmental authority."

Petitioner's Arguments

  • Counsel for the universities submitted that affiliation and NOC issuance are mandatory statutory duties under UGC guidelines and their respective founding Acts, leaving no discretion to refuse consideration of any qualifying application, and hence not "business" as defined in Section 2(17).
  • It was argued that in the absence of an activity "in the course or furtherance of business" under Section 7(1), no supply of service arises, relying on decisions of the Bombay High Court (Goa University), Delhi High Court (Central Electricity Regulatory Commission), and Karnataka High Court (Bengaluru North University), all decided in favour of similarly placed institutions.
  • Alternatively, exemption was claimed under Entry 66 of Notification No.12/2017 and Entries 4 and 5 relating to governmental authorities discharging municipal or panchayat-like functions.

Respondent's Arguments

  • The Standing Counsel for the Department contended that any supply of service by a governmental authority is taxable under Sections 7 and 2(17) unless specifically covered by Schedule III or a notified exemption under Section 7(2)(b), and that no such coverage or exemption applied to affiliation and NOC fees.
  • Reliance was placed on a contrary ruling of the Telangana High Court (W.P.No.34617 of 2022) rejecting similar exemption claims by universities.

Court Order / Findings

  • The Court held that the petitioner universities, though statutory bodies, are separate entities and not part of the Central Government, State Government, or a local authority, so Sections 7(2)(b) and 2(17)(i) (which remove the business requirement for government supplies) did not apply to them.
  • However, the Court found that granting affiliation and issuing NOCs are mandatory statutory functions in which the universities have no discretion, and are therefore not "business" as defined under Section 2(17), since that definition contemplates voluntary commercial activity.
  • Consequently, such activities do not constitute "supply of service" under Section 7 at all, making the exemption-notification question moot; the Court distinguished the Telangana High Court ruling as having addressed only the exemption question, not the antecedent taxability issue.
  • All the writ petitions were allowed, and the impugned demand orders against each university were set aside, without costs.

Important Clarification

  • A statutory body's exercise of a mandatory regulatory function — where it has no discretion to decline a qualifying application — falls outside the definition of "business" under Section 2(17) and is therefore not a taxable "supply" under Section 7, independent of any exemption notification.
  • This taxability analysis is distinct from, and logically prior to, the question of whether a specific exemption notification applies; a ruling addressing only the notification does not settle whether the activity is taxable in the first place.

Sections Involved

  • Section 7, CGST Act, 2017 — defines scope of supply, requiring an activity in the course or furtherance of business for taxability under Section 7(1).
  • Section 2(17), CGST Act, 2017 — defines "business," held not to extend to mandatory statutory functions with no element of discretion.
  • Section 9, CGST Act, 2017 — levy and collection of tax on taxable supplies.
  • Notification No.12/2017-Central Tax (Rate) — exemption entries for educational institutions and governmental authorities, held not necessary to invoke given the taxability finding.

Decision – In Favour of

The decision is in favour of the assessees (the universities), with all demand orders set aside on the finding that the affiliation and NOC services were not taxable supplies in the first place.

Case Details

Court: High Court of Andhra Pradesh at Amaravati
Case Number: W.P.No.23535 of 2023, and batch (W.P.Nos.31934 of 2023, 7867 and 26414 of 2025, and 9123 of 2026)
Coram: Hon'ble Sri Justice R. Raghunandan Rao and Hon'ble Sri Justice T.C.D. Sekhar
Date of Judgment: 27.04.2026

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