The Madurai Bench of Madras High Court held that the university cannot be assessed for demanding any service tax for providing Education services including affiliation.
The petitioner, Madurai Kamaraj University is a State University was established by an Act of State Legislature called Madurai Kamaraj University Act, 1965 as an affiliating University. The petitioner university was established as an affiliating university under which several colleges in the territorial jurisdiction got affiliated and in those colleges as well as the colleges run by the University itself, the prime function of the university is to hold examinations and to confer degrees, titles, diplomas etc. Also it is the prime function of the university to affiliate the colleges to the university as affiliated, professional or postgraduate colleges and also to withdraw such affiliations from those colleges. With this aim and main function, the petitioner university had been established and has been functioning for all these years.
The issue raised was whether such services of providing affiliation to its affiliated institutions by the petitioner university can be treated as a taxable service within the meaning of service tax as provided under 1994 Finance Act, till 2017 ie., till the day on which the GST regime has come. In this context, from 01.04.2013, till 30.06.2017, it is the claim of the respondent revenue that the petitioner’s university services towards affiliation and other allied or related services are to be treated as taxable service.
The university against levying the service tax on the services such as renting of immovable property for the purpose of bank, post office, canteen etc., as we stated above, these are all allied services of education which are also included in the purview of educational services, in view of clause 9, which has given an expanded meaning of educational services which includes the services to be provided not only to the students, but also faculty and staff. In this category, the faculty and staff of the university are getting whatsoever services by way of transportation, boarding and lodging etc., are also to be included in the meaning educational services being provided by the educational institutions ie., the petitioner herein which can also be exempted from the purview of service tax.
The single judge bench of Justice R.Suresh Kumar held that as the petitioner educational institution i.e. the university cannot be assessed for demanding any service tax for the services of education provided by them, which includes affiliation or other services provided for the students, faculty as well as the staff of the university.
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