Madras High Court
Bharathidasan University vs The Joint Commissioner Of Gst And ... on 21 September, 2021
W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
BEFORE THE MADURAI BENCH OF MADRAS HIGH Court
DATED: 21.09.2021
CORAM
THE HON'BLE MR.JUSTICE R.SURESH KUMAR
W.P.(MD)No.8353 of 2019
and
W.M.P.(MD)No.6567 of 2019
(Through video conference)
Bharathidasan University,
Rep. by its Registrar ...Petitioner
-Vs-
The Joint Commissioner of GST and Central Excise,
Office of the Commissioner of GST and Central Excise,
Williams Road,
Cantonment,
Tiruchirappalli. ... Respondent
Prayer: Writ Petition filed under Article 226 of Constitution of India, to
issue a Writ of Certiorari, calling for the records relating to the impugned
proceedings passed by respondent in C.No.V/ST/15/19/2018-S-T.Adjn,
dated 20.02.2019 and quash the same.
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
For Petitioner : Mr.VR.Shanmuganathan
For Respondent : Mrs.S.Ragaventhre
Standing Counsel
ORDER
Prayer sought for herein is for a Writ of Certiorari, calling for the
records relating to the impugned proceedings passed by respondent in
C.No.V/ST/15/19/2018-S-T.Adjn, dated 20.02.2019 and quash the same.
2.Petitioner is a State University, which was established by an Act
of State legislature called “The Bharathidasan University Act, 1981”. It
is an affiliating University having territorial jurisdiction over the revenue
Districts of Tiruchirappalli, Thanjavur and Pudukkottai presently divided
into Tiruchirappalli, Karur, Perambalur, Ariyalur, Thanjavur,
Nagapattinam, Thiruvarur and Pudukkottai.
3.The petitioner/University is holding service tax Registration
No.AABAB0471ASD002 and have been paying service tax duly. While,
that being so, the respondent revenue seems to have called upon the
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
petitioner/University to provide certain details relating to the colleges
affiliated to the University and the affiliation fees collected from them
and the general inspection charges for the affiliated colleges for the
period from 01.07.2012 to 31.03.2017. The petitioner had given reply.
Thereafter, a show cause notice was given on 23.10.2018, by the
respondent revenue to the petitioner stating that the petitioner/University
under two heads is liable to pay service tax. The first head is renting of
immovable properties, such as banks, post office etc., and the second
head is other services of the University like affiliation fees, application
fee for affiliation of new courses and rent collected from commercial
establishments, etc.
4.Altogether, the revenue issued a show cause notice for the
proposed tax due of service tax on those heads for a sum of
Rs.54,24,258/-.
5.The petitioner/University had given reply and in fact it seems to
have paid the service tax on 04.01.2019, however, without prejudice their
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
right to challenge the proposed action on the part of the revenue to levy
the service tax on such services rendered by the petitioner/University.
6.Ultimately, on 20.02.2019, the respondent revenue passed order
in original, whereby, confirming the proposal made through the show
cause notice, and accordingly, demanded the service tax levied against
them, and also order of levy of interest under Section 75 of the Finance
Act, 1994, and penalty to the tune of Rs.35,01,093/- under Section 78 of
the Finance Act, 1994, and also imposing a penalty of Rs.10,000/- under
Section 77 of the Finance Act, 1994. Challenging the said order in
original, the present writ petition has been filed.
7.Mr.VR.Shanmuganathan, learned counsel appearing for the
petitioner, at the outset, would submit that the issue raised in this writ
petition is covered by a recent decision of this Court, in the matter of
Madurai Kamaraj University v. Joint Commissioner, Office of the
Commissioner GST & Central Excise in W.P(MD)No.20502 of 2019
dated 16.08.2021.
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
8.However, Mrs.S.Ragaventhre, learned Standing Counsel
appearing for the respondent would vehemently contend that the facts of
this case are slightly different from the facts of the Madurai Kamaraj
University case and therefore, the decision taken in the said case cannot
be said to be made applicable to the facts of the present case.
9.She would also submit that if the petitioner/University having
permitted the third parties to occupy the lands and buildings of the
petitioner/University to various service providers, out of which,
commercially, they earned rent, that cannot be fit in within the meaning
of Educational Services, she contended. Therefore, the learned Standing
Counsel would submit that, it cannot be accepted that the Judgment in
Madurai Kamaraj University cited supra would be made applicable to the
facts of the present case.
10.In fact, I had an occasion to consider the case of the said
University, namely, Madurai Kamaraj University, in the said case, in
W.P(MD)No.20502 of 2019, dated 16.08.2021, where, a detailed order
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
having considered the exemption provided under the authorised
provision of the Finance Act, 1994, as well as “Mega Exemption
Notification” of the year 2012, I have allowed the said writ petition
declaring that the University, being an affiliating University cannot be
brought under the purview of service tax for the services rendered
including the service of affiliation and other allied services.
11.The relevant portion of the order cited supra reads thus:
“11. After having gone into these arguments
and the connected records, this Court feels that,
the only question posed before this Court for
decision is that, whether the services rendered
by the petitioner university by granting
affiliation and its allied activities and also by
providing shelter in their campus to the service
providers like Bank, Post Office, or catering etc.,
directly beneficial to the students, staff and
faculty of the university, are exempted services
within the meaning of Section 66-D of the
Finance Act and also under the Mega Exemption
Notification of the year 2012 as amended from
time to time.
12. The history of introduction of service
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
tax has been traced by the learned Counsel for
the petitioner, which has been discussed in the
earlier paragraphs. Up to 2012, the term
“service” seems to have not been explained.
First time, the term “service” has been
explained under Clause 44 of Section 65-B,
which has already been quoted hereinabove.
13. While giving such explanation for the
term “service”, the legislature also thought it fit
to introduce two sections, namely, Section 66-B
and 66-D. 66-B is a charging section which
makes it clear that, there shall be levied a tax at
the rate of 12% on all services other than those
specified in the negative list. Therefore, what
are all the services provided under the negative
list are taken away from the purview of Service
Tax net. The exempted services as provided
under Section 66-D Clause 'l', alone has been
quoted hereinabove.
14. Under Clause 'l' there are three
categories of services by educational
institutions. One is pre-school to higher
secondary education service, second is
education as a part of curriculum for obtaining a
qualification recognised by law for the time
being in force and the third one is education as
a part of an approved vocational course. This
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
Court feels that, sub-clause 2 of Clause 'l' of
Section 66-D is relevant for the present issue,
the reason being that, whatever be the
education as a part of curriculum for obtaining a
qualification recognised by law for the time
being in force means whatever be the Degree,
Diploma, PG diploma, Professional Degree or
Post Graduate Degree are concerned, in order to
obtain such qualification, if education being
imparted as a part of curriculum, that education
shall be part of service for the purpose Clause 'l'
for getting exemption.
15. When an educational institution is
imparting education as part of curriculum for
obtaining a qualification as stated supra, no
doubt, such services are being exempted and in
this context, there can be no quarrel from the
revenue side also.
16. However, whether such kind of
service of imparting education as part of
curriculum for obtaining a qualification whether
is rendered by the petitioner university is a
question where, it is the stand of the revenue
that, the university is not directly imparting any
education except providing affiliation to the
institution, but would not deal with imparting
education to the students. Therefore, the
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
activities of affiliation and allied activities like
inspection etc., cannot be treated as imparting
education by the educational institution
concerned.
17. However, insofar as the said stand
taken by the revenue is concerned, we must
take into aid the expanded provision which has
subsequently been inserted under mega
notification referred to above, whereby, clause 9
has been inserted with effect from 11.07.2014,
where, the services provided by the educational
institution to its students, faculty and staff are
mentioned. The word “students”, that we can
understand, with, the services provided, is
nothing but imparting education, whereas, the
services to be provided by the educational
institution to its faculty and staff is concerned,
certainly, it may not be a direct activity of
imparting education. No staff or faculty is going
to get any imparting of education either from
the institution or from the university. Hence, it
is not limited to the services of imparting
education to students alone for the purpose of
exemption, but, it expands beyond which,
where, whatever the services to be provided by
the educational institution to its faculty and staff
shall also form part of the activity of education
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
being provided by way of services by the
educational institution. If we take up this
language used, exactly, the services provided by
the educational institutions including the
university not only for students but also for
faculty and staff would be covered under the
exempted purview.
18. Not stopping with that, it goes further
saying that, an educational institution can
render services by way of transportation of
students, transportation of faculty and
transportation of staff. Like that it further goes,
like, catering including any mid-day meal
scheme sponsored by the Government. It further
expands to security or cleaning or housekeeping
services performed in such educational
institutions. It also expands to services relating
to admission or conduct of examination by such
institutions. The word 'such institution'
according to the revenue is nothing but the
institution which impart education and conduct
examination ie., affiliated college and not the
university. But, in the considered view of this
Court, that kind of interpretation is not possible,
in view of the expanded meaning that has been
given and the explanation given, which shows
the intention of the Central Government who
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
issued the mega exemption notification, under
which, we can understand that, what are all the
allied services that shall form part of the
educational services, which may be services
provided to the staff, services provided to the
faculty, expanded services like transportation,
boarding and lodging and other allied activities
enabling the students as well as the staff and
faculty to come to the institution and getting
imparted the education.
19. In this context, sub-clause (iv) of
clause 9 referred to above is so important,
which says that, services related to admission or
conduct of examination by such institution are
exempted services. Here, the services rendered
to admission is two fold, one is the admission
being made for the students in a particular
institution. However, such admission can be
made legally by the said institution, only on the
basis of the affiliation granted by the University,
fixing the intake strength of each and every
course for the particular academic year.
Illustratively, if there is a class where the
university has given permission/affiliation for
100 students, not even 101 students can be
admitted by the college. Therefore, that
admission of the students strictly relates to the
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
affiliation granted by the university. Therefore,
the affiliation activity is an integral part of
imparting education for any student for getting
qualified to get a qualification like degree or
diploma. Accordingly, the services provided by
the educational institution like the petitioner
institution ie., the university to give affiliation
can be an integral part of the educational
services, being provided jointly, both by the
University and the college. The college cannot
independently function without the affiliation of
the university. Therefore, for the purpose of
providing the services of education, both the
university as well as the college concerned, who
get affiliated to the university, cannot be
separated.
20. This is the purposive interpretation
which is only possible, because, the services
relating to admission and also the conduct of
examination by such institution has been
exempted. When we talk about the conducting of
examination, it is the vehement contention of the
revenue as submitted by the learned Standing
Counsel by relying upon the advance ruling
referred to above, stating that, exempted service
on the conduct of examination is that, it relates
to admission to institution and anything related
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
to examination, based on which, degree, title or
diploma is conferred to the students.
21. With respect, this Court is of the
concerned view that, that kind of narrow or
pedantic interpretation cannot be possible in the
words “conduct of examination”. The reason
being, the very prime function of the petitioner
university under the statute, under which it has
been created, under Section 4(4) of the
University Act, which has been quoted herein
above, is to hold examinations and to confer
degrees, titles, diplomas and other academic
distinctions. Therefore, holding or conducting an
examination is primarily a job of the university
and the colleges affiliated to the university are
only facilitators. Therefore, examinations are not
conducted directly by the colleges, it is being
conducted by the university, but the facilitator is
the college. Therefore, the word “conduct of
examination by such institution” means, conduct
of examination by the university and the college
and not by the college alone. The examination is
the examination of the university, for which,
facilitation is given by the college, wherein the
examinations are conducted and ultimately,
valuation is to be done by the university and
marks are awarded and degree is conferred by
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
the university. Therefore, it is the university,
where, the facilitator is the college, where, the
examination is being taken place and therefore,
the word “conduct of examination”, cannot have
such a narrow and pedantic interpretation as
has been given by the Advance Ruling Authority
in their order dated 19.11.2020, which has been
in fact, heavily relied upon by the respondent
revenue. Therefore, this Court is not subscribing
the said view given by the Advance Ruling
Authority in their order dated 19.11.2020.
22. In this context, it is further to be noted
that, the very Advance Ruling Authority in the
said order in paragraph No.7.6. has also made it
clear that, we do not part any opinion on the
claim of the applicant that they extend such
services to the institutions by extending the
affiliation. Therefore, the said issue as claimed
by the said university in the said ruling of the
Advance Ruling Authority has not been
answered and it has been kept open by stating
the aforesaid that they do not want to express
any opinion on such claim. Therefore, the claim
made by the university on that aspect even
though was indicated, the issue was kept open.
In that context also, this Court feels that, no
such pedantic or narrow view can be taken as
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
that would destroy the very concept of providing
exemptions to the services rendered by the
educational institutions. The word “educational
institution”, cannot denote only the college
affiliated to the university, but, it includes the
university. As stated above, without the
university, college cannot impart education on
its own.
23. Moreover, the regime of service tax,
ie., prior to the GST came into the field, had
continuously made available the exemption
provisions, initially by Section 66-D, from 2012,
subsequently the mega notification, wherein, in
the year 2014 clause 9 was inserted and
subsequently by notification 9 of 2016, Clause 'l'
of Section 66-D, which was omitted from the
year 2016, had been reintroduced by
introduction of clause (oa), where, under the
heading “educational institution”, the exact
Clause 'l' of Section 66-D has been inserted.
Therefore, throughout the regime between 2012
and 2017, the educational institution had been
provided with the exemption as has been stated
in various provisions of the Act as well as the
mega notification, followed by the amended
notification and during all these periods, these
institutions including the universities can very
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
well enjoy the exemption. Accordingly, the stand
taken by the revenue for levying service tax for
the services being provided by the petitioner
university cannot be approved.
24. Insofar as the second part of the claim
made by the respondent 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.
Therefore, that aspect of assessment and
demand made for levying service tax on the
services provided by the petitioner institution
under the heading renting of immovable
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
property also, in the considered view of this
Court, cannot be sustained. 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.
25. The alternative appeal remedy plea
raised by the respondent also has been
considered and in this context, the judgment of
the Gujarat High Court has been placed for my
consideration, where the Court has simply
relegated the party therein to go before the
appellate authority under Section 86 of the
Finance Act. In my considered view, here, the
issue is, whether the exemption claimed by the
petitioner is tenable or not is the main question,
where, already there has been a judgment by
the learned Judge by order dated 22.02.2021, as
referred to above, where certain area has not
been considered, as the mega notification was
not brought before the Writ Court and therefore,
it normally cannot be resolved by the appellate
authority under Section 86 of the Finance Act.
Therefore, that kind of relegation of parties to
the appellate authority, in this context, in the
present case, does not arise.
26. In the result, the impugned order is
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
liable to be set aside as the petitioner
educational institution ie., 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.
27. Accordingly, the impugned order is set
aside and the writ petition is allowed. However,
there shall be no order as to costs.
Consequently, the connected miscellaneous
petition is closed.”
12.In view of the said order having been passed, where the issue
raised in this writ petition is covered, this Court has no hesitation to hold
that the present writ petition is to be allowed, accordingly, the impugned
order is set aside and the petition is allowed, as a sequel, if any tax
already paid, pursuant to the impugned demand, by the petitioner
towards the respondent revenue, the same shall be refunded within a
period of 60 days from the date of receipt of a copy of this order.
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
13.With these directions, this writ petition is ordered accordingly.
However, there shall be no order as to costs. Consequently, the
connected miscellaneous petition is closed.
21.09.2021
Index : Yes/No
Internet : Yes/No
PNM/PJL
Note: In view of the present lock down owing to COVID-19
pandemic, a web copy of the order may be utilized for
official purposes, but, ensuring that the copy of the order
that is presented is the correct copy, shall be the
responsibility of the Advocate/litigant concerned.
To
The Joint Commissioner of GST and Central Excise,
Office of the Commissioner of GST and Central Excise,
Williams Road,
Cantonment,
Tiruchirappalli.
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W.P(MD) No.8353 of 2019
Bharathidasan University,Rep. by its Registrar v.
The Joint Commissioner of GST and Central Excise
R.SURESH KUMAR, J.
PNM/PJL
Order made in
W.P.(MD)No.8353 of 2019
Dated:
21.09.2021
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