HC calls GST on MU affiliation fees ‘absurd’, scraps ₹33.8 crore demand

A division bench of Justices GS Kulkarni and Aarti Sathe set aside the orders of the Additional Commissioner of Central Tax, which had imposed ₹16.90 crore GST along with an equal penalty

MUMBAI: In a major relief to the University of Mumbai, the Bombay High Court has struck down a ₹33.80 crore Goods and Service Tax (GST) demand on affiliation fees, calling the move “gross absurdity” and ruling that a university’s statutory functions cannot be treated as “business.”. The court quashed the tax orders which were issued in January 2025, including penalties.

HC calls GST on MU affiliation fees ‘absurd’, scraps ₹33.8 crore demand

A division bench of Justices GS Kulkarni and Aarti Sathe set aside the orders of the Additional Commissioner of Central Tax, which had imposed ₹16.90 crore GST along with an equal penalty.

The court said universities operate under the Maharashtra Public Universities Act, 2016 meant to regulate and strengthen higher education, and not to carry out commercial activities. Treating such functions as business “would amount to doing violence to the purpose and intention of the legislation,” the bench observed and allowed the petition filed by MU.

The university had argued that affiliation fees are part of its statutory role and not a commercial service, stressing that there is no profit motive in educational functions. It also said such fees cannot be treated as “consideration” for supply of services under GST law.

They contended that the definition of business under the CGST Act is wide and includes activities regardless of profit motive. They argued that affiliation fees are linked to services provided to colleges and therefore taxable.

Rejecting this stand, the high court ruled that statutory functions like granting affiliation do not qualify as “supply” under GST provisions, and hence cannot be taxed under charging provision i.e. Section 9.

The bench said treating a university as a business entity would amount to “making a mockery of the University law,” and struck down the GST levy and related notices.