No Service Tax On Alumni Fee Collected By University In Absence of Service: CESTAT Bengaluru

The Bengaluru Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) on 24 April held that no service tax can be levied on alumni fee collected by a university in the absence of any corresponding service.

A Bench of Judicial Member Dr. D.M. Misra and Technical Member R. Bhagya Devi allowed the appeal filed by Manipal Education & Medical Group India Pvt. Ltd. and set aside a service tax demand exceeding Rs. 97 lakh raised by the Commissioner of Central Excise & Service Tax, Mangaluru. It observed:

“.....the services rendered by the appellant does not relates to Alumni services to the ex-students, if any, provided by the Sikkim Manipal University against the alumni fees collected by the University along with Tuition Fees. Therefore, alleging that the Alumni Fee which has been collected along with the tuition fees should be included in the gross taxable value, in the absence of any service by the appellant, cannot be sustained.”

The Manipal Group, provides education-related support services such as admissions assistance, e-learning facilitation, and operational support to Sikkim Manipal University. It operated under a detailed agreement for a fixed, predetermined consideration.

The company contended that its consideration was strictly linked to tuition fees received by the university and that it did not render any alumni-related services. It further submitted that the alumni fee was independently collected by the university from students and did not form part of the consideration payable to it.

The Tribunal examined the agreement and found that the scope of services did not include any activity relating to alumni or ex-students. It noted that the company's obligations were confined to education auxiliary and support services, including development of course content, technological infrastructure, and administrative assistance.

Rejecting the Department's contention, the Tribunal held that in the absence of any service rendered in relation to alumni activities, the alumni fee could not be included in the taxable value.

The Bench also relied on its earlier decision in the case of Sikkim Manipal University, where it had held that alumni fees collected without providing any service are not subject to service tax, reiterating that tax liability arises only when a fee is linked to a taxable service. It stated:

“....the impugned order which confirms demand on the Alumni Fee collected by Sikkim Manipal University cannot be sustained. No contrary decision has been placed by the Revenue to substantiate the confirmation of demand......”

Accordingly, the CESTAT allowed the appeal both on merits and on limitation, set aside the impugned order, and granted consequential relief to the company.

For Appellant: Sajjan Kumar Tulsiyan, Advocate

For Respondent: M. A. Jithendra, Assistant Commissioner