Landmark Judgment Clarifies Affiliation Fees as Non-Taxable Under GST Laws
In a significant judgment delivered on April 27, 2026, the Bombay High Court has ruled that affiliation fees collected by statutory universities are not liable to Goods and Services Tax (GST), as these fees do not constitute "supply" under Section 7 of the Central Goods and Services Tax (CGST) Act, 2017. The Division Bench, comprising Justices G.S. Kulkarni and Aarti Sathe, concluded that the activities of granting affiliation are statutory and regulatory in nature, rather than business activities, which are exempt from GST under the Exemption Notification No. 12/2017-CT(R) dated June 28, 2017.
The case, University of Mumbai v. Union of India, revolved around a GST demand of Rs. 16.9 crore for affiliation fees collected by the University over the financial years 2017-18 to 2022-23. The court found that affiliation fees are statutory levies integral to the educational process and not consideration for any taxable activity. The judgment emphasized that the statutory duties performed by universities in granting affiliation do not fall within the scope of "supply" as defined by GST laws.
The ruling draws from previous judgments, including the Karnataka High Court's decision in Principal Additional Director General, DGGSTI v. Rajiv Gandhi University of Health Sciences, which was upheld by the Supreme Court. The court dismissed the notion that affiliation fees could be interpreted as a business activity, thus reversing the GST demand.
Additionally, the court highlighted the importance of statutory functions performed by universities under the Maharashtra Public Universities Act, 2016, and rejected the circulars issued by the Central Board and Indirect Taxes that sought to levy GST on such fees. This decision marks a crucial clarification for educational institutions across India, ensuring that statutory functions related to education remain outside the GST purview.
Bottom line:-
Goods and Services Tax (GST) - Affiliation fees collected by statutory universities do not constitute "supply" under Section 7 of CGST Act, 2017, and thus, are not liable to GST. Such fees are statutory levies in the discharge of regulatory and statutory functions and not consideration for any taxable activity.
Statutory provision(s): Central Goods and Services Tax (CGST) Act, 2017, Sections 7 and 9; Exemption Notification No. 12/2017-CT(R) dated 28.06.2017
University of Mumbai v. Union of India, (Bombay)(DB) : Law Finder Doc id # 2889586
