The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi in a case argued by Dr. Sanjiv Agarwal has set aside a service tax demand on affiliation fees imposed on the University of Kota quashed.
The bench of Binu Tamta (Judicial Member) and Sanjiv Srivastava (Technical Member) observed that affiliation fees collected by the university do not qualify as “services” rendered for consideration under the Finance Act, 1994, due to the absence of any commercial intent.
The bench relied on a string of earlier judgments and particularly emphasized the Karnataka High Court’s decision in Rajiv Gandhi University of Health Sciences vs. DG of GST Intelligence, which held that statutory functions like granting affiliation by public universities are not “activities for consideration.”
The appellant, University of Kota, a state government university in Rajasthan, was slapped with a demand for service tax amounting to ₹1,18,35,056 by the Commissioner of Central Goods and Service Tax (CGST), Jodhpur. The department alleged that the university had failed to pay tax on affiliation and recognition fees collected from self-financed colleges between 2012 and 2017, before the advent of GST.
The department also imposed penalties of an equal amount under Section 78 of the Finance Act, ₹10,000 under Section 77 for failure to obtain registration and file returns, and ordered the recovery of applicable interest.
The Tribunal concluded that the collection of affiliation fees is a statutory function devoid of commercial elements. Such activities lack the necessary “quid pro quo” to be treated as a taxable service. The concept of “consideration” under service tax law necessitates a contractual arrangement, which is absent in this case.
The Tribunal also noted that the Supreme Court had dismissed the Special Leave Petition filed by the tax department against the Karnataka High Court’s ruling, thereby reinforcing the non-taxability of such statutory fees.
The CESTAT set aside the earlier orders of both the Commissioner (Appeals) and the original adjudicating authority, effectively quashing the entire service tax demand, interest, and penalties.
Case Details
Case Title: Registrar M/s University of Kota Versus Commissioner, Central Goods Service Tax & Central Excise, Jodhpur
Case No.: Service Tax Appeal No.50874Of 2020
Date: 01.08.2025
Counsel For Appellant: CA Sanjiv Agarwal
Counsel For Respondent: AR Shashank Yadav
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