GST not Leviable on course fees paid by students to educational institution: Delhi HC

Introduction: The recent judgment by the Hon’ble Delhi High Court in the case of Association of Diplomate of National Board Doctors v. National Medical Commission [W.P No. 10326 of 2021 dated November 1, 2023] has significant implications for the taxation of educational course fees. This article provides a detailed analysis of the court’s decision, the background, and its impact. The Hon’ble Delhi High Court directed the Respondent to refund amount of GST collected on course fees, as no GST is leviable on the amount of Course Fees paid to educational institutions.

Facts:

National Board of Examination (“the Respondent”) issued notifications dated January 15, 2021 and August 19, 2021 (“the Impugned Notification”) directing the DNB candidates to deposit GST amount along with the course fee. Aggrieved by the Impugned Notification, Association of Diplomate of National Board Doctors (“the Petitioner”) filed a writ petition before the Hon’ble Delhi High Court contending that GST is not leviable on course fees and, therefore, collection of the GST was erroneous.

Issue:

Whether GST amount could be levied on course fees paid to educational institutions?

Held:

The Hon’ble Delhi High Court in the case of W.P No. 10326 of 2021 held as under:

• Opined that, the Impugned Notification issued by the Respondent for collection of GST amount along with the course fees is liable to be set aside. Thereby, the writ petition is disposed of.
• Directed that, the Respondent shall take steps to refund the amount of GST collected from the candidates.

Our Comment:

As per Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017, vide Entry No. 66, Services provided by the Educational Institutions to its students under Heading 9992 fall within the purview of exempted services, therefore no GST is leviable in aforesaid scenario.

Conclusion: The Delhi High Court’s decision clarifies that GST is not applicable to course fees paid to educational institutions. This ruling provides relief to students and upholds the exempted status of educational services. It also sets a precedent for similar cases and reinforces the correct interpretation of GST laws concerning the education sector.

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