HC Rules No GST on University Affiliation and NOC Fees

A batch of writ petitions was filed by various State universities including Jawaharlal Nehru Technological University, Kakinada, challenging GST demands raised on affiliation fees and No Objection Certificate (NOC) fees collected from affiliated colleges. The tax authorities treated such receipts as consideration for “supply of services” and raised demands along with interest and penalties under the CGST Act, 2017.

The universities contended that they are statutory bodies created under State enactments and the grant of affiliation or issuance of NOCs is not a commercial activity but a mandatory statutory function governed by law and UGC guidelines. It was argued that such activities are not carried out “in the course or furtherance of business,” and therefore fall outside the scope of taxable supply under the GST framework.

Issue Before Court: Whether affiliation fees and NOC fees collected by State universities from affiliated colleges constitute taxable “supply of services” under the GST Act, 2017?

HC Decided: The Andhra Pradesh High Court allowed the writ petitions and set aside the GST demands, holding that the activities of granting affiliation and issuing NOCs are statutory functions and not business activities. The Court observed that “supply” under Section 7 of the GST Act covers only those activities undertaken in the course or furtherance of business. Since universities are legally bound to grant or refuse affiliation based on statutory requirements, such functions cannot be treated as voluntary or commercial in nature.

It was further held that universities established under State Acts are not equivalent to the Central Government, State Government, or local authorities for the purpose of automatic taxability under Section 7(2). Accordingly, their statutory functions do not fall within the ambit of taxable supply. Once it was concluded that the activity itself is not taxable, the Court held that the question of exemption under GST notifications does not arise.

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