Facts of the Case

The petitioner, Rani Channamma University, Belagavi, challenged an adjudication order dated 30.12.2023 passed under Section 73(9) of the CGST/KGST Act, 2017 read with Rule 142(5), along with a subsequent order dated 29.04.2024 and a further order with DRC-07 summaries dated 27.08.2024 for FY 2019-22, demanding GST on affiliation fees, PG registration fees, admission fees and convocation fees collected from constituent colleges and students. The petitioner also challenged Notifications extending limitation under Section 168A and a CBIC circular (No.151/07/2021-GST) and a subsequent circular (No.234/28/2024-GST) clarifying taxability of affiliation fees, contending its statutory, regulatory functions were not 'business' or 'supply' attracting GST.

Issues Involved

  1. Whether a University's affiliation, registration, admission and convocation fee income constitutes 'supply' in the course or furtherance of 'business' under Sections 7 and 2(17) of the CGST Act.
  2. Whether such fees qualify as 'consideration', and whether the University's statutory/regulatory functions are exempt under Entry No.66 of Notification No.12/2017-CT(R).
  3. Whether the impugned CBIC circulars clarifying taxability of affiliation fees are legally valid.

Petitioner's Arguments

  • The petitioner's activities, being statutory and regulatory functions performed under its enabling Act, are not commercial in nature and do not amount to 'business' under Section 2(17) of the CGST Act.
  • Fees collected for affiliation, registration, admission and convocation are statutory/regulatory levies lacking any contractual quid pro quo, and therefore cannot be treated as 'consideration' under Section 2(31).
  • The University itself qualifies as an 'educational institution' for the purposes of the exemption under Entry No.66 of Notification No.12/2017-CT(R), since affiliated colleges' students are ultimately students of the University which confers the degree.
  • The issue stood squarely covered in the petitioner's favour by the coordinate Bench ruling in Bengaluru North University, itself following the Bombay High Court's Goa University decision and the Karnataka High Court's own Rajiv Gandhi University of Health Sciences ruling.

Respondent's Arguments

  • The department relied on CBIC Circular No.151/07/2021-GST and the subsequent Circular No.234/28/2024-GST to contend that affiliation and related fees collected by Universities were taxable supplies attracting GST.

Court Order / Findings

  • Following its own coordinate Bench ruling in Bengaluru North University (itself adopting the Bombay High Court's Goa University decision), the Court held that the activities of Universities are not commercial in nature and cannot be termed 'supply' in the course or furtherance of business; the fees collected are not 'consideration' since they lack contractual quid pro quo and are statutory/regulatory levies; and such fees are, in any event, exempt under Entry No.66 of Notification No.12/2017-CT(R) since Universities qualify as educational institutions.
  • The impugned CBIC circulars (dated 17.06.2021 and 11.10.2024) were held illegal and invalid to the extent they sought to add conditions curtailing the scope of the exemption notification through mere circulars.
  • All the impugned show cause notices and orders dated 30.12.2023, 29.04.2024 and 27.08.2024 were quashed.

Important Clarification

  • Fees collected by statutory Universities for affiliation, PG registration, admission and convocation are not 'consideration' for a 'supply' under Sections 7 and 2(31) of the CGST Act, being statutory/regulatory levies without contractual quid pro quo, and are additionally exempt under Entry No.66 of Notification No.12/2017-CT(R) as Universities qualify as educational institutions.
  • A CBIC circular cannot add conditions to, or narrow the scope of, an exemption notification - such circulars are liable to be struck down as ultra vires where they attempt to bring statutorily exempt university fee income within the GST net.

Sections Involved

  • Section 7, CGST Act, 2017 - scope of supply.
  • Section 2(17), CGST Act, 2017 - definition of 'business'.
  • Section 2(31), CGST Act, 2017 - definition of 'consideration'.
  • Notification No.12/2017-CT(R), Entry No.66 - exemption for services relating to education.

Decision – In Favour of

Decided in favour of the assessee; show cause notices, orders and the impugned circulars quashed/held invalid.

Case Details

  • Court: High Court of Karnataka, Dharwad Bench
  • Case No.: WP No. 100780 of 2024 (T-RES)
  • Coram: Justice M. Nagaprasanna
  • Date: 24th November, 2025

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