Order Date: 26 July 2022

Facts-

• The Petitioner, Rajiv Gandhi University of Health Science is imparting education and the entire affiliation fee is received towards the same. 
• The Revenue Department has issued the Show Cause Notice proposing to levy Service tax on the affiliation fees, penalty/ fine for delayed payment from Colleges affiliated to it and also rents from certain buildings rented out by it. 
• The Petitioner contended that as per the provisions of Section 66D of the Finance Act, 1994 and Notification No.25/2012-ST the consideration received by providing service by way of education as a part of curriculum for obtaining a qualification recognized by any law for the time being in force is exempted from Service tax and thereby, the affiliation fee received by the petitioner is also exempted from service tax.
• The Revenue admitted that the consideration received by the Institutions is exempted from service tax. However, the affiliation fee received by the Petitioner cannot be considered as part of the said services and that it is a consideration received towards the services provided to private Institutions by affiliating the same.
• Being aggrieved, the petitioner filed the present writ petition.

Issue-

• Whether the Petitioner is liable to pay Service tax on affiliation fee and on building rent received by them?

Order-

• The Single Bench Hon’ble High Court observed that negative list under Section 66D of the Finance Act is not chargeable to service tax. Clause (l) of Section 66D of the Finance Act covers services provided by educational institutions and consequently the educational services are not chargeable to Service tax.
• The court further observed that the Petitioner has to be considered as an Educational Institution for imparting education by itself and also through its affiliated colleges. Therefore, the said universities would qualify to be educational institutions and services provided would not be chargeable to tax on the affiliation and other incidental charges collected by Petitioner.
• The Court held that in furtherance to imparting education some of the buildings for rented for canteen, bank and other facility, the said activity has to be considered as an activity incidental to provide services of education and it is a service naturally bundled in the ordinary course of business as per Clause (3) of Section 66 (F) of the Finance Act and the rent received also deserves to be exempted once the activity of providing education by the Petitioner is exempted from Service Tax.
• Accordingly, the show cause notice is hereby set aside and the writ petition is disposed of.