ARA, Rajasthan has pronounced judgment on 11.11.2022, in the case of University of Kota, Kota (2022) 38 J.K.Jain’s GST & VR 426 that;
“Affiliation granted to colleges for imparting education is not exempt vide entry No.66 of notfn No.12/2017-CT(R) dated 28.6.2017 and Affiliation in relation to a college is an activity to recognize such college to the privileges of the university to which the institution is affiliated.”
1.Background.─The applicant is a University established under the University of Kota Act, 2003. Applicant undertake activities related to affiliation of colleges as affiliated, professional or post graduate colleges under conditions prescribed and to withdraw affiliation from colleges; to approve colleges providing course of study for admission to the examinations for titles and diplomas of the University under conditions prescribed and to withdraw such approval; to designate any college as an autonomous college with the concurrence of the Govt. in the manner and under conditions prescribed and to cancel such designation and collect various fees in this regard from the institutions; to collect affiliation fee charged by the applicant from various self-financing/non-Govt. colleges/Govt. colleges as decided by the Affiliation Fee Committee which varies from course to course for which affiliation is provided and notified by the university with copies to education department etc. The applicant has sought ruling on the following question:
“whether the services provided by the University of Kota relating to affiliation granted to colleges for imparting education is a supply of service liable to levy of GST under the CGST Act, 2017? If yes, whether amount collected by way of affiliation fee, are exempted vide entry No.66 of notfn No.12/2017-CT(R) dated 28.6.2017”.
Analysis by ARA – It is stated by the applicant that in the Pre-GST regime, affiliation fee was an exempt taxable service vide entry No.9 of notfn No.25/2012-ST dated 20.6.2012. Applicant has raised the question on the eligibility of the notfn to the service supplied by them. Therefore, the application is admitted & the question is taken up for decision.
The ARA observed that the facts of the case as seen from the records before us is that the applicant is a University established with the object-to affiliate colleges to the University as affiliated, Professional or postgraduate colleges under conditions prescribed and to withdraw affiliation from colleges; to approve colleges providing courses of study for admission to the examinations for titles and diplomas of the University under conditions prescribed and to withdraw such approval. It is stated that applicant collect affiliation fees from the Institutions who seek affiliation.
It is the contention of the applicant that “affiliation” is the exempted supply with purpose to the colleges for admission of students and/or conduct of examinations for the purpose of getting a degree and therefore the exemption provided under entry No.66(b)(iv) of notfn No.12/2017-CT(R) dated 28.6.2017 as amended by notfn No.02/2018-CT(R) dated 25.1,2018 with effect from 25.1.2018 is applicable to the said supply.
The applicant claims that the services extended by them are the ‘services provided to an educational institution by way of services relating to admission to, or conduct of examination by such institution’ and effective from 25.1.2018, i.e., after the words ‘up to higher secondary’ stands omitted as per entry (o)(ii)(A) of notfn 2/2018 in the entry No.66(b)(iv) of the notfn No.12/2017-CT(R) dated 28.6.2017, their activity of affiliation merits exemption under the said entry. It is their contention that the fees collected & the activities undertaken towards affiliation of the institution, course, extension of course, etc. are services provided to ‘educational institutions’, ‘in relation to’ admission & conduct of examination in as much as the institution cannot admit a student without affiliation and the student cannot take the examination unless he is registered with the university through the college as per the Kota University Act, 2003.
Findings by ARA – The ARA observed that the whole claim is based on entry at entry No.66 of notfn No.12/2017-CT(R) dated 28.6.2017 under which exemption is claimed and we will take up it for analysis as follows:
The relevant extract of entryNo.66 of exemption notfn reads as under:
“Services provided:–
(a) by an educational institution to its students, faculty and staff;
(b) to an educational institution, by way of,─
Transportation of students, faculty and staff;
catering, including any mid-day meals scheme sponsored by the Govt.;
Security or cleaning or house-keeping services performed in such educational institution;
Services relating to admission to, or conduct of examination by, such institution up to higher secondary(up to 24.1.2018).
The above entry is amended by notfn No.02/2018-CT(R) dated 25.1,2018 and the amendment is as under:
Accordingly, w.e.f. 25.1.2018 (as amended vide notfn No.02/2018-CT(R) dated 25.1,2018), the entry as follows:
Services provided─
(a) by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;
(b) to an educational institution, by way of,─
(i) transportation of students, faculty and staff;
(ii) catering, including any mid-day meals scheme sponsored by the Central Govt., State Govt. or Union territory;
(iii) security or cleaning or house-keeping services performed in such educational institution;
(iv) services relating to admission to, or conduct of examination by, such institution:
Provided that nothing contained in sub-items (i), (ii) and (iii) of item (b) shall apply to an educational institution other than an institution providing services by way of pre-school education and education up to higher secondary school or equivalent.
Provided further that nothing contained in sub-item (iv) of item (b) shall apply to an institution providing services by way of─
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of an approved vocational education course.
(v) supply of online educational journals or periodicals:
By the amendment made w.e.f. 25.1.2018, the words ‘up to higher secondary’ were omitted in clause (b)(iv).
In this regard, it is pertinent to examine the comments of the Fitment Committee as seen in the agenda notes placed before the 25th meeting of the GST Council and the minutes of the said meeting as the decision of the said meeting was effected vide notfn No.2/2018-CT(R) dated 25.1.2018. Reference to the discussions and the decisions of the GST Council, a Constitutional Body, is to understand the intention of the amendment. The relevant recommendation of the ‘Fitment Committee’ accepted by the Council as under─
“To exempt services relating to admission to, or conduct of examination. provided to all educational institutions, as defined in the notfn. To exempt services by educational institution by way of conduct of entrance examination against consideration in the form of entrance fee is given below for ease of reference:”
From the above, it can be seen that the amendment was proposed to exempt services relating to admission to, or conduct of examination for admission to all educational institutions, as defined in the notfn (definition 2(y) of notfn No.12/2017-CT(R)). Thus the entry at 66(b)(iv) seeks to exempt only those services provided to such institution in relation to admission of students or conduct of examination for such admission to all the educational Institutions, including the higher educational institutions, which were not exempted up to this amendment
The ARA have gone through the judicial pronouncements of various judicial authority pertains to phrase “in relation to”. We have also gone through the decisions of various courts submitted by applicant on dated 29.8.2022. We found that none of pronouncement submitted by applicant in his favors squarely covers the present question of law in respect of applicability of GST on affiliation fees. Further we find that all the case laws are relating to erstwhile service tax Act and provisions of Service Tax Act cannot be equated to GST Act and entirely different so not applicable in the instant case.
Now The ARA would like to discuss the clarification circular quoted by the applicant. The relevant portion of clarification made under Cir. No. 177/09/2022-TRU dated 3.8.2022 is as under:–
Applicability of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions.
“4.1 Representations have been received regarding applicability of GST on application fee charged for entrance or the fee charged for issuance of eligibility certificate for admission or for issuance of migration certificate by educational institutions.
4.2 In this regard, it is stated that educational services supplied by educational institutions to its students are exempt from GST vide entry 66 of the notfn No.12/2017-CT(R) dated 28.6.2017 relevant portion of which reads as under,–
“Services provided–a. by an educational institution to its students, faculty and staff;
(aa) by an educational institution by way of conduct of entrance examination against consideration in the form of entrance fee;”
4.3 Therefore, it can be seen that all services supplied by an ‘educational institution’ to its students are exempt from GST. Consideration charged by the educational institutes by way of entrance fee for conduct of entrance examination is also exempt. The exemption is wide enough to cover the amount or fee charged for admission or entrance, or amount charged for application fee for entrance, or the fee charged from prospective students for issuance of eligibility certificate to them in the process of their entrance/admission to the educational institution. Services supplied by an educational institution by way of issuance of migration certificate to the leaving or ex-students are also covered by the exemption. Accordingly, such activities of educational institution are also exempt.
4.4 Accordingly, it is clarified that the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under entry No.66 of notfn No.12/2017-CT(R) dated 28.6.2017.”
On examination of above said clarification the ARA did not found that affiliation fees so collected by applicant from its affiliated colleges is exempt. Further we would like to refer Cir. No.151/07/2021-GST dated 17.6.2021 regarding Clarification regarding GST on supply of various services by Central and State Board (such as National Board of Examination) wherein it is clarified at entry No.4(iii) that 18% GST will be applied to other services. Relevant portion is as under–
“4. Taking into account the above, the GST Council has recommended, to clarify as below: (i) GST is exempt on services provided by Central or State Boards (including the boards such as NBE) by way of conduct of examination for the students, including conduct of entrance examination for admission to educational institution [under entry No.66(aa) of notfn No.12/2017-CT(R) dated 28.6.2017. Therefore, GST shall not apply to any fee or any amount charged by such Boards for conduct of such examinations including entrance examinations.
(ii) GST is also exempt on input services relating to admission to, or conduct of examination, such as online testing service, result publication, printing for examination, admit card and questions papers etc, when provided to such Boards [under entry No.66(b)(iv) of notfn No.12/2017-CT(R) dated 28.6.2017].
(iii) GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGF screening test) so as to authorize them to provide their respective services which is more relevant in the matter.”
The ARA observed that the affiliation fees under the general functions by the University to colleges regarding approval for a college, approval for a course, start-up approval, permanent affiliation, continuation of affiliation for each course, permission for increase in intake for each course and penal fee for Late Application and such collection of fees appeared to be not relating to admission to or conduct of examination, by such institution. These services would not fall under the ambit of the exemption provided in the said notfn. Also, as per the wording of the notfn only the services relating to admission or to conduct examination, by such institution i.e., only the services relating admission of students or conduct of examination is exempted and the other above services are chargeable to applicable GST.
The ARA further observed that as per the definition of affiliation under regulation, affiliation in relation to a college is an activity to recognize such college to the privileges of the university to which the institution is affiliated. In other words, the activity of affiliation is to monitor whether the institution possess the required infrastructure in terms of Space, Technical prowess, financial liquidity, faculty strength, etc. and thereby eligible for the privileges to conduct the course/programme of study for the degree/title extended by the University to the students enrolled in such institutions.
In the case at hand, it is evident that the affiliation services provided by the applicant enables the said institution to conduct the course/programme and do not relate to admission of students to such course/programme in the said institutions or conduct of examination for such admission in the said institution. Also, the exempted services on the conduct of examination is that related to the admission to such institution and not related to the examination based on which degree/ title, etc. are conferred to the students, as is being claimed by the applicant, though we do not part any opinion on the claim of the applicant that they extend such services to the institutions by extending the affiliation. Therefore, we hold that ‘affiliation’ fees so collected by the applicant is not exempted under the entry SI.No.66 of notfn No.12/2017-CT(R) dated 28.6.2017 as amended.
Ruling.─In view of the foregoing, the ARA ruled as follows:–
Q.1: Whether the services provided by the University of Kota relating to affiliation granted to colleges for imparting education is a supply of service liable to levy of GST under the CGST Act, 2017? If yes, whether amount collected by way of affiliation fee, are exempted vide entry No.66 of notfn No.12/2017-CT(R) dated 28.6.2017
Ans.1: The affiliation provided by the Kota University to its constituent colleges for imparting education is a supply and taxable under GST. The amount collected by way of affiliation fees is not exempted vide entry No.66 notfn No.12/2017-CT(R) dated 28.6.2017 as amended.
CA Om Prakash Jain s/o J.K.Jain, Jaipur
Tel 9414300730/9462749040
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