In a major relief to Rajeev Gandhi Proudyogiki Vishwavidyalay (RGPV), the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), New Delhi, has set aside a service tax demand of Rs. 6.07 crore, ruling that charges collected by the university for granting affiliation and related services do not attract service tax under the Finance Act, 1994.
The bench of Binu Tamta (Judicial Member) and Hemambika R. Priya (Technical Member), also noted that the Supreme Court had recently dismissed a Special Leave Petition filed by the Revenue against a similar Karnataka High Court ruling, effectively settling the matter.
The case stemmed from a Show Cause Notice issued in March 2018, alleging non-payment of service tax by RGPV on amounts collected as affiliation fees, inspection charges, no objection certificate (NOC) fees, and minor rental income from campus premises. The adjudicating authority had earlier upheld the demand, imposing an equivalent penalty under Section 78 of the Finance Act.
RGPV challenged the ruling, contending that its actions were in line with statutory obligations under the Rajeev Gandhi Proudyogiki Vishwavidyalay Adhiniyam, 1998, and lacked commercial intent. Citing precedents, including the Karnataka High Court’s judgment in Rajiv Gandhi University of Health Sciences, the appellant argued that affiliation activities are integral to the education system and cannot be taxed as services performed for consideration.
The Tribunal concurred, stating that “affiliation granted by a statutory university in discharge of its statutory functions cannot be treated as a taxable service,” and emphasized that such functions lack the commercial character required under the definition of “service” as per Section 65B(44) of the Finance Act.
With respect to rental income, the Tribunal observed that since the affiliation fees were not taxable, RGPV qualified for the basic exemption threshold. Consequently, the demand on rental income and the associated penalties were also quashed.
Case Details
Case Title: Rajeev Gandhi Proudyogiki Vishwavidyalay Versus The Principal Commissioner, Central Tax, Customs & Central Excise, Bhopal
Case No.: Service Tax Appeal No.50713 of 2019
Date: 26.06.2025
Counsel For Appellant: CA Sandeep Mukherjee
Counsel For Respondent: AR S.K.Meena
