The Madras High Court has held that educational institution that is 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 staff of the university.
Brief Facts
The petitioner is a State University and was aggrieved by an order of the tax authorities demanding service tax.
Reasoning and Decision of Law
It was the plea of Tax Department that the exemption is available only to colleges and not universities. The Court did not agree to it and held,
“The word “educational institution”, cannot denote only the college affiliated to the university, but it includes the university. Without the university, college cannot impart education on its own.”
The second claim made by the respondent university against levying the service tax on the services such as renting of immovable property for the purpose of the bank, post office, canteen etc, was that these are all allied services of education which are also included in the purview of educational services, 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.
The Court held in this respect,
“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.”
“Therefore, on both aspects, the assessment and demand made by the respondent, in the considered view of this Court, is untenable, and therefore, it is liable to be interfered with.”
Held
The Court concluded that the impugned order is liable to be set aside as the petitioner educational institution that is 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. Therefore, in all respect, the impugned order shall not stand in the legal scrutiny. Accordingly, the impugned order was set aside and the writ petition is allowed.
Case Details
Case Name: Madurai Kamaraj University V. Joint Commissioner, Office Of Commissioner Of Gst And Central Excise
Date of Decision: August 16, 2021
Bench: Hon’ble Mr. Justice R. Suresh Kumar
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