GST Payable On Affiliation Fees Collected by Universities: Madras High Court

The Madurai Bench of the Madras High Court has held that affiliation fees collected by universities from affiliated colleges are amenable to levy of Goods and Services Tax (GST). The Bench of Justice Dr. G. Jayachandran and Justice K.K. Ramakrishnan observed that affiliation services are independent of admission and examination. They do not fall within the scope of Entry 66 exemption. Affiliation fees collected by universities are subject to GST. A batch of writ petitions filed by Bharathidasan University challenging notices issued under Section 74(5) of the Tamil Nadu GST Act, 2017 for the assessment years 2019–2020 to 2022–2023. The GST Intelligence Wing had alleged that affiliation fees collected by the University were taxable and not covered under the exemption available to educational institutions. The principal question referred to the Division Bench was whether affiliation charges collected by a University from the affiliating Institution is amenable to levy of GST. The controversy arose due to divergent views expressed by two Single Judges of the High Court in earlier cases. One line of decisions had adopted a purposive interpretation and extended exemption to affiliation services, treating them as integral to admission and examination. The other line of judgments held that exemption notifications in taxing statutes must be strictly construed and cannot be expanded beyond their plain language. Bharathidasan University contended that affiliation services are intrinsically connected with education. It argued that affiliation enables colleges to admit students and conduct examinations, and therefore the fees collected should qualify as services “relating to admission to, or conduct of examination by” educational institutions under Entry 66 of Notification No. 12/2017. The University also relied on constitutional provisions and CBIC circulars to argue that educational activities should be interpreted broadly to promote the object of exemption. The GST Department argued that affiliation is an independent regulatory function carried out prior to the admission of students. It does not constitute a service provided to students nor does it directly relate to the conduct of examinations. Therefore, it falls outside the exemption notification and is liable to GST. The Department further relied on Circular No. 234/28/2024-GST dated 11.10.2024, issued pursuant to the 54th GST Council Meeting, clarifying that affiliation services provided by educational boards or similar bodies are taxable, except when provided to government schools (which were specifically exempted prospectively). The Court observed that the exemption under Entry 66 is limited to services provided by an educational institution to its students, faculty, and staff; and services relating to admission or conduct of examination. It held that affiliation is a pre-admission regulatory activity. It ensures infrastructure, faculty strength, and compliance standards before colleges are permitted to admit students. Admission begins only after affiliation is granted. The Bench rejected the argument that affiliation should be given an extended meaning under the expression “services relating to admission.” It held that exemption provisions in tax statutes must be strictly interpreted, and no extended or purposive interpretation can be applied when the language is clear. The Court placed significant reliance on the 2024 GST Council recommendation and the subsequent circular clarifying that affiliation services are not services relating to admission or examination. It noted that the circular merely clarified the existing legal position and did not impose a new levy. The Bench considered the earlier Madurai Kamaraj University decision, which favored exemption. The later Pondicherry University and Manonmaniam Sundaranar University rulings, which denied exemption. The Bombay High Court decision in Goa University granting relief. The Telangana High Court ruling holding affiliation taxable. The Division Bench held that the later view expressed in Pondicherry University represents the correct legal position. The reference was answered accordingly, and the matter was remitted back to the Single Judge for adjudication on other grounds, if any. Case Details Case Title: Bharathidasan University Versus The Joint Commissioner of GST Case No.: W.P.(MD)Nos.27453, 27456 to 27458 of 2025 Date: 10.02.2026 Counsel For Petitioner: V.R.Shanmuganathan Counsel For Respondent: R.Sureshkumar Click Here To Read Order

GST Payable On Affiliation Fees Collected by Universities: Madras High Court

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