The Andhra Pradesh High Court has held that Goods and Services Tax (GST) cannot be levied on affiliation fees and No Objection Certificate (NOC) fees collected by State universities from affiliated colleges, as such activities are statutory in nature and do not qualify as “business” under the GST regime.
The Bench of Justice R. Raghunandan Rao and Justice T.C.D. Sekhar delivered a common judgment in a batch of writ petitions, including the case of Jawaharlal Nehru Technological University, Kakinada (JNTUK), challenging GST demands raised by the tax authorities.
The dispute arose after GST authorities issued assessment orders demanding tax, interest, and penalties on fees collected by universities for granting affiliation and issuing NOCs to colleges. For instance, JNTUK alone faced a demand exceeding ₹2.64 crore for the period July 2017 to March 2020.
The universities argued that they are statutory bodies established under State legislation and perform functions mandated by law and UGC guidelines. They contended that granting affiliation and issuing NOCs are compulsory regulatory functions, not commercial activities, and hence fall outside the scope of “supply” under Section 7 of the CGST Act.
On the other hand, the tax department maintained that any service provided for consideration qualifies as a taxable supply under GST unless specifically exempted, and that the universities were not entitled to exemptions under Notification No. 12/2017.
After examining the statutory framework, the Court held that for an activity to qualify as a taxable “supply,” it must be carried out in the course or furtherance of business. The Court emphasized that statutory obligations imposed on universities cannot be equated with business activities.
The Bench observed that universities are mandated to process applications for affiliation and grant or deny the same based on regulatory requirements. These functions are neither voluntary nor commercial, but are performed in discharge of statutory duties.
The Court clarified that such universities are not “State” or “local authorities” for the purpose of automatically attracting GST on all activities, and therefore, their functions must still satisfy the test of “business” to be taxable.
The Court held that statutory functions performed by universities do not fall within the definition of “business” under Section 2(17) of the CGST Act, and consequently, do not constitute “supply” under Section 7. As a result, GST cannot be levied on such activities.
The Court also noted that since the activities themselves are not taxable, the question of claiming exemption under GST notifications does not arise.
The High Court set aside all the impugned assessment orders across the batch of petitions and allowed the writ petitions in favour of the universities.
Case Details
Case Title: Jawaharlal Nehru Technological University Kakinada (JNTUK) Versus The Principal Commissioner Of Central Tax
Citation: JURISHOUR-986-HC-2026(AP)
Case No.: Writ Petition Nos: 23535 Of 2023
Date: 27.04.2026
Counsel For Petitioner: Lakshmi Kumaran Sridharan
Counsel For Respondent: Harinath N
