Service tax relief for Madurai Kamaraj University

The Madurai Bench of the Madras High Court has held that the university cannot be assessed for any service tax for educational services provided by them

Madurai Kamaraj University. File

Bringing relief to Madurai Kamaraj University, the Madurai Bench of the Madras High Court has held that the university cannot be assessed for any service tax for educational services provided by them including affiliation and other services.

The court was hearing a petition filed in 2019 by the university challenging an order passed by Joint Commissioner, Office of the Commissioner of GST and Central Excise, that sought service tax from the university from 2013 to 2017.

In 1994, the Finance Act was enacted and the concept of service tax was introduced. Only three services were categorised as services to be taxed under the Finance Act. In 2012, an amendment was made to the Finance Act dealing with service tax.

Under Clause I of Section 66 D, there was an exemption for educational services. However, in 2016, Clause I was omitted. A notification called Mega Exemption Notification was issued by the Centre. Educational services were again exempted. It continued till 2017 when the GST regime came into effect.

The university sought an exemption from the service tax. But, the Joint Commissioner’s claim was that the university’s services towards affiliation and other allied or related services were to be treated as taxable service.

Justice R. Suresh Kumar observed that when an educational institution imparted education as part of the curriculum for obtaining qualification, such services were being exempted. It was not limited to the services of imparting education to the students alone, but went beyond.

Renting out immovable properties for banks, post offices, canteens and other such allied services of education were included under the purview of educational services. The services provided not only to students, but also faculty and staff.

The court set aside the order of the Joint Commissioner and observed that the university could not be assessed for service tax for the educational services provided by them that included the affiliation or other services provided to the students, the faculty and the staff of the university.