Madras High Court
The Tamil Nadu Dr.Mgr Medical ... vs The Principal Additional ... on 12 April, 2022
W.P.Nos.21907 & 26300 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 12.04.2022
CORAM :
THE HONOURABLE MR.JUSTICE R.SURESH KUMAR
Writ Petition Nos.21907 and 26300 of 2021
and W.M.P.Nos.23106, 27758 & 27761 of 2021
W.P.No.21907 of 2021
The Tamil Nadu Dr.MGR Medical University
Rep.by its Registrar, No.69, Anna Salai
Guindy, Chennai 600 032. …. Petitioner
-Vs-
1.The Principal Additional Director General
Directorate General of Goods and Services
Tax, Intelligence, Chennai Zonal Unit
C-3, C-Wing II Floor, Rajaji Bhavan
Besant Nagar, Chennai 600 090.
2.Principal Commissioner of Central Tax
and GST, MHU Complex, No.692,
Anna Salai, Nandanam, Chennai 600 035. …. Respondents
Prayer : Writ Petition under Article 226 of the Constitution of India praying to issue a
writ of Certiorari to call for the records relating to file F.No.INV/DGCEI/CHZU/ST /
19/2017 O R No.98/2017 show cause Notice No. 05/2018 dated 24.1.2018 passed by
the First respondent and quash the same as arbitrary and illegal.
For Petitioner : Mr.Joseph Prabhakar
For Respondents : Mrs.R.Hemalatha
Senior Standing Counel
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W.P.No.21907 of 2021
The Registrar
Periyar University, Periyar Palkalai Nagar
Salem-636 001. ... Petitioner
-Vs-
1.The Principal Chief Commissioner of GST
and Central Excise 26 GST
Bhawan 1 Uthamar Gandhi Rd Thousand Lights
West Nungambakkam Chennai- 600 034.
2.The Commissioner
Office of the Commissioner of GST and
Central Excise No.1 Foulks compound
Anai Road Salem-636 001.
3.The Joint Commissioner
Office of the Commissioner of GST and
Central Excise No.1 Foulks Compound Anai
Road salem- 636 001.
4.The Assistant Commissioner
Salem Division- I Office of the Assistant
Commissioner of GST and Central Excise
Salem I Division No.106 Varalakshmi Orchid
Ramakrishna Road, Salem – 636 007.
5.The Superintendent
Office of the Superintendent of Customs
Central Excise and Service Tax Salem III
Range No.1/ 276 Meyyanoor Road Shiva
Towers Salem- 636 004. ... Respondents
Prayer : Calling for the record relating to the impugned order issued by the 2nd
respondent commissioner of GST and central Excise in C.No. V/ 15/ RIS AES/ 25/
2018- ST dated 31.03.2021 demanding payment of service tax from the Petitioner
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W.P.Nos.21907 & 26300 of 2021
University along with extension of limitation period interest and penalty for the
period from 01.07.2012 to 30.06.2017 and the consequential order passed by the 5th
respondent superintendent of customs central Excise and Service tax Salem III
Range vide proceedings in O.C. No. 24/ 2021 dated 05.04.2021 directing the
petitioner University to pay service tax immediately and submit the challans for the
same, quash the same.
For Petitioner : Mr.P.Godson Swaminath
for M/s.Isaac Chambers
For Respondents : Mr.Umesh Rao.K
Senior Standing Counsel
COMMON ORDER
Since the issue raised in these writ petitions is one and the same, with the
consent of the learned counsel appearing on either side, both the writ petitions were
heard together and disposed of by this common order.
2. That the petitioners are State Universities created under the Act of State
Legislature. The petitioner University in W.P.No.21907 of 2021 is a Medical University
under whom all the medical colleges run in the State of Tamil Nadu are affiliated.
3. In respect of the petitioner in W.P.No.26300 of 2021 is concerned, it is a
general University, where other non professional colleges in the territorial jurisdiction
of that University are affiliated.
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3. These Universities are primarily affiliating Universities under which several
institutions get affiliated and the students admitted in the affiliated institutions are
being tested by conducting examinations and the degrees are being awarded by these
Universities.
4. For the said process of affiliation and related activities including examinations
etc., the petitioner Universities respectively have fixed certain fee structure as per the
decision taken by the respective Syndicate or Governing Council of the Universities
concerned.
5. Apart from this fee fixed for affiliation and related activities, certain
immovable properties are rented out which are located in the respective University
campuses for the purpose of housing Bank, ATM, Post Office, Staff Canteen, Students
Canteen etc.,
6. According to the learned counsel for the petitioners, these activities are
educational activities and therefore for these educational activities whatever the fee or
rent collected by these Universities from those for whom it has been rented out, as
the same are only for the benefit of the students and staff of the Universities, the
Universities are to be exempted from the purview of Service Tax.
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7. They also submitted that, whether these services being rendered by the
Universities are to be exempted from the purview of service tax is no more res integra
as that issue has been exhaustively considered and decided by a decision of this Court
in the matter of “Madurai Kamaraj University -Vs- Joint Commissioner, Office
of the Commissioner of GST and Central Excise, Madurai” dated 16.08.2021
made in W.P.(MD) No.20502 of 2019.
8. Relying upon this decision, the learned counsel for the petitioner Universities
would contend that, the issue raised in these writ petitions is squarely covered by the
said decision and therefore the show cause notice issued in respect of petitioner
University in W.P.No.21907 of 2021 and the Order-in-Original issued in respect of
petitioner University in W.P.No.26300 of 2021 are liable to be set aside in view of the
law declared in the said order cited supra.
9. Mrs.R.Hemalatha, learned Senior Standing Counsel for the respondents in
W.P.No.21907 of 2021 and Mr.Umesh Rao, learned Senior Standing Counsel appearing
for the respondents in W.P.No.26300 of 2021, on instructions would submit that, first
of all against the order in Madurai Kamaraj University case cited supra, an intra-
court appeal has been filed, where the appeal has been entertained, however no
interim stay has been granted.
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10. Since the writ appeal filed against the order in Madurai Kamaraj
University case dated 16.08.2021 having been entertained by the Division Bench of
this Court, the issue is not conclusively decided and therefore the benefit arising out
of the said decision cannot be extended to these petitioner Universities, they
contended.
11. That apart, the learned Standing Counsel appearing for the respondents in
both the writ petitions have also submitted that, assuming without admitting that the
services rendered by the Universities in providing affiliation to the colleges for which
fee is collected by them as affiliation fee and for any other allied activities such as
conduct of examinations, award of degree etc., are concerned, if at all that may be
covered by the decision of this Court in Madurai Kamaraj University case cited
supra, insofar as the revenue which they derive from various tenants like Bank, Post
Office, Canteen etc., for whom immovable properties of the Universities have been let
in, that cannot be brought under the purview of exemption clause which was provided
only to give exemption for educational activities.
12. In other words, they would contend that, the revenue derived by the
Universities by way of rent from various third parties for letting out the property
belonging to the Universities cannot be treated as educational services. Therefore, for
such revenue that they collect definitely they shall be brought under the purview of
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service tax. Hence, to that extent the impugned proposal made by way of show cause
notice and the order-in-original passed against the petitioners herein can be sustained,
they contended.
13. I have considered the rival submissions made by the learned counsel
appearing for either side and have perused the materials placed on record.
14. As has been rightly pointed out by the learned counsel for the petitioner
Universities, the issue raised in these writ petitions is no more res integra, at least for
the present, in view of the judgment made in “Madurai Kamaraj University -Vs-
Joint Commissioner, Office of the Commissioner of GST and Central Excise,
Madurai” dated 16.08.2021 made in W.P.(MD) No.20502 of 2019., where I had an
occasion to consider the issue in depth and passed an exhaustive order, where all
positive grounds raised by the petitioner as well as the respondent in that case having
been considered, was given an answer by this Court in the said judgment.
15. Insofar as the objections raised by the learned Standing Counsel appearing
for the respondents that, the rental income derived by these Universities cannot be
treated as educational services is concerned, that has also been dealt with seperately
in my order dated 16.08.2021 in the case cited supra and in order to understand the
same, the relevant portions of the said order is extracted hereunder.
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W.P.Nos.21907 & 26300 of 2021
“ 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 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
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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 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.”
16. Therefore, the services rendered by the petitioner Universities by way of
affiliation and allied activities including the conduct of examinations, awarding of
degrees, diplomas etc., and also the income they derived from rent paid by the third
parties like Postal Department, Banks etc., and also to run Canteen for the purpose of
Students and Staff, were considered to be allied services attached with the educational
activities undertaken by the Universities and therefore they are also exempted.
17. Since that view had been taken in the Madurai Kamaraj University
case, I have no hesitation to hold that the issue raised in entirety in these two writ
petitions is covered by the decision of this Court cited supra. In that view of the
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matter, the following orders are passed in these writ petitions.
● That the impugned show cause notice dated 24.01.2018 in
W.P.No.21907 of 2021 and the impugned Order-in-Original
dated 31.03.2021 in W.P.No.26300 of 2021 are hereby set
aside.
● The writ petitions in all respects are allowed in the terms
indicated above. However, there shall be no order as to costs.
Consequently, connected miscellaneous petitions are closed.
12.04.2022
Index : Yes
Internet : Yes
KST
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W.P.Nos.21907 & 26300 of 2021
To
1.The Principal Additional Director General
Directorate General of Goods and Services
Tax, Intelligence, Chennai Zonal Unit
C-3, C-Wing II Floor, Rajaji Bhavan
Besant Nagar, Chennai 600 090.
2.Principal Commissioner of Central Tax
and GST, MHU Complex, No.692,
Anna Salai, Nandanam, Chennai 600 035.
3.The Principal Chief Commissioner of GST
and Central Excise 26 GST
Bhawan 1 Uthamar Gandhi Rd Thousand Lights
West Nungambakkam Chennai- 600 034.
4.The Commissioner
Office of the Commissioner of GST and
Central Excise No.1 Foulks compound
Anai Road Salem-636 001.
5.The Joint Commissioner
Office of the Commissioner of GST and
Central Excise No.1 Foulks Compound Anai
Road salem- 636 001.
6.The Assistant Commissioner
Salem Division- I Office of the Assistant
Commissioner of GST and Central Excise
Salem I Division No.106 Varalakshmi Orchid
Ramakrishna Road, Salem – 636 007.
7.The Superintendent
Office of the Superintendent of Customs
Central Excise and Service Tax Salem III
Range No.1/ 276 Meyyanoor Road Shiva
Towers Salem- 636 004.
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W.P.Nos.21907 & 26300 of 2021
R. SURESH KUMAR, J.
KST
W.P.Nos.21907 & 26300 of 2021
12.04.2022
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