GST UPDATE

Hon’ble Authority: GSTAT
Case Title: COUNCIL FOR THE INDIAN SCHOOL CERTIFICATE EXAMINATIONS vs CGST DELHI EAST, COMMISSIONER, ITO & ORS.
Appeal No. & Citation: APL/10/DEL/2026

Hon’ble Judge(s)	Hon’ble Sh. Sanjay Kumar Aggarwal, Member(Judicial) Hon’ble Sh. Rajiv Kapoor, Member (Technical)
Date of Order	31/08/2026
Outcome

Brief Facts of the Case

The appellant, Council for the Indian School Certificate Examinations (CISCE), is a society registered under the Societies Registration Act, 1860 and is engaged in educational activities such as affiliation of schools, conducting ICSE and ISC examinations and registration of students. It obtained GST registration in September 2018. The Department conducted an investigation after alleging that GST had not been paid on certain receipts such as affiliation fees, processing charges, annual registration charges and late charges. The Department raised demands under Sections 74 and 73 along with interest and penalties. The adjudicating authority confirmed the demands, while the Commissioner (Appeals) granted substantial relief, including “as is where is” regularisation of affiliation fees and processing charges for the relevant period and exclusion of certain other receipts. The remaining dispute was thereafter considered by GSTAT Delhi.

Question before Hon’ble Authority

The Tribunal framed eight principal issues:

Whether a consolidated SCN could cover July 2017 to November 2023.
Whether the activities of CISCE constituted “supply” under Section 7 read with Section 9.
Whether affiliation and affiliation-processing charges were exempt under Entry 66(b)(iv).
Whether annual registration and late registration charges were exempt.
Whether Circular No. 234/28/2024-GST was valid and binding.
Whether the receipts were required to be treated as inclusive of GST under Rule 35.
Whether Section 74 could validly be invoked.
Whether interest and penalties were sustainable.

Findings and Judgement

For the purpose of better understanding and clarity for our readers, contentions of the Appellant, respondent and the findings of the Tribunal has been discussed separately with respect of each issue.
Issue No. I
Validity of consolidated SCN covering multiple tax periods
Contentions of the Appellant
The appellant contended that the Show Cause Notice dated 18.01.2024, covering the period from July 2017 to November 2023, was legally unsustainable as it consolidated different tax periods and invoked Section 74 for July 2017 to August 2018 and Section 73 for September 2018 to November 2023. It was submitted that Sections 73 and 74 operate in materially different fields. Section 73 applies where tax has not been paid or has been short-paid, or ITC has been wrongly availed/utilised, for reasons other than fraud, wilful misstatement or suppression of facts, whereas Section 74 applies where such liability arises by reason of fraud, wilful misstatement or suppression of facts. Consequently, the two provisions prescribe different statutory ingredients, limitation periods and penal consequences.
The appellant further argued that GST assessment is necessarily relatable to a definite tax period, as Section 2(106) defines “tax period” as the period for which the return is required to be furnished. Therefore, each tax period is required to be separately identified and dealt with, particularly where the limitation provisions under Sections 73 and 74 operate differently. Further, it was also contended that where the liability is ultimately relatable to the annual return, the relevant period would be the financial year, and therefore different financial years/tax periods could not validly be clubbed together in one SCN and one adjudication order.
Reliance was placed upon the decision of the Hon’ble Bombay High Court in M/s Milroc Good Earth Developers, Mariposa Beachgrove v. Union of India, 2025 (10) TMI 867.
Contentions of the Respondent
The learned Authorised Representative held that there is no express prohibition in the CGST Act against issuance of a common SCN covering more than one tax period or financial year. It was submitted that the SCN clearly identified the tax liability period-wise and separately invoked Section 74 for the period involving allegations of fraud/suppression and Section 73 for the remaining period.The Revenue contended that the validity of the SCN has to be examined with reference to whether the statutory requirements and limitation prescribed under the respective provisions have been satisfied for the relevant period. The mere fact that several periods have been incorporated in one document does not render the notice invalid.
Reliance was placed particularly upon the judgment of the Hon’ble Delhi High Court in M/s Ambika Traders v. Additional Commissioner, Adjudication, DGGI, Delhi, wherein the Court held that the language of Sections 73(3), 73(4), 74(3) and 74(4), particularly the expressions “for any period” and “for such periods”, permits a notice covering a period extending beyond a single financial year. Reliance was also placed on decision of Delhi High Court in case of M/s Mathur Polymers.
Analysis and Findings of the Tribunal
The Tribunal examined the statutory scheme of Sections 73 and 74 along with the definition of “tax period” under Section 2(106) of the CGST Act. It observed that although Sections 73 and 74 operate in different fields and prescribe different limitation periods and consequences, the distinction between the two provisions does not by itself create any statutory embargo against issuance of a consolidated SCN.The Tribunal placed particular reliance upon the language employed in Sections 73(3), 73(4), 74(3) and 74(4), which uses the expressions “for any period” and “for such periods”. This was contrasted with Sections 73(10) and 74(10), where the legislature specifically refers to the “financial year” for determining the outer time-limit for passing the order.
The Tribunal agreed with the judgment of the Hon’ble Delhi High Court in Ambika Traders. The Tribunal also took note of the fact that the SLP filed against Ambika Traders was dismissed by the Hon’ble Supreme Court as not pressed, while the SLP arising from Mathur Polymers was also dismissed.
Accordingly, the Tribunal held that consolidation of multiple tax periods in one SCN is not, by itself, sufficient to invalidate the proceedings.
Conclusion
The Tribunal held that issuance of a consolidated SCN and consequential order covering July 2017 to November 2023, with Sections 74 and 73 invoked for different periods, is not per se invalid, particularly where the period-wise liability is identified and no prejudice or denial of opportunity is demonstrated.

Cases Relied Upon

Case Law relied upon by the Tribunal	Citation
M/s Ambika Traders v. Additional Commissioner	W.P.(C) 4853/2025
M/s Mathur Polymers v. Union of India & Ors.	W.P.(C) 2394/2025
M/s Technosys Integrated Solutions Pvt. Ltd. v. Union of India & Ors.	W.P.(C) 5581/2025, decided on 16.03.2026
M/s Raghunath Enterprises v. Additional Commissioner, CGST, Delhi North	W.P.(C) 5352/2025, decided on 20.08.2025
Ambika Traders v. Additional Commissioner — SLP	SLP (C) No. 23774/2025, dated 01/09/2025
Mathur Polymers — SLP	SLP (Civil) Diary No. 50279/2025

Issue no II & Issue no III
Issue no. II: Whether the activities of the appellant constitute 'supply' under Section 7 read with Section 9 of the Act 2017?
Issue no. III: Whether affiliation (including affiliation processing/form charges) is an independent taxable supply or forms an integral part of ‘services relating to admission to, or conduct of examination’ under the Exemption Notification dated 28.06.2017, and is thereby exempt?
Appellant's contention
The appellant argued that its activities were educational and non-profit in nature. It was not carrying on trade or commerce. According to the appellant, the essential ingredients of GST levy under Section 7 were absent because the activities were not undertaken in the course or furtherance of “business”.
Reliance was placed upon the educational character of CISCE and decisions such as T.M.A. Pai Foundation and Sai Publication Fund. The appellant also argued that affiliation was performed in discharge of educational and regulatory functions and lacked a commercial element.
The appellant further relied upon judgments concerning statutory universities, particularly Rajiv Gandhi University of Health Sciences, Goa University, University of Mumbai, Rajasthan Technical University, and Ahmedabad Urban Development Authority, to contend that affiliation fees do not constitute consideration for a taxable supply.
Entry 66(b)(iv) of Notification No. 12/2017-CT(R) exempts:
services to an educational institution relating to admission to, or conduct of examination by, such institution.
The appellant argued that affiliation is inseparably connected with the examination system because schools cannot present students for ICSE/ISC examinations without CISCE affiliation. Further, according to CISCE, affiliation is not merely accreditation. It is the foundational mechanism through which a school becomes part of the examination system.
Without affiliation:

students cannot be presented for ICSE/ISC examinations;
the school cannot operate within the CISCE examination framework;
the curriculum prescribed by CISCE cannot be implemented for purposes of CISCE examinations.

Therefore, the expression “services relating to” should receive a broad interpretation covering activities intrinsically connected with examination. The appellant also relied upon Doypack Systems Pvt. Ltd. to contend that the expression “in relation to” should receive a broad and comprehensive interpretation and should include activities having a direct or indirect connection with the principal activity.
It was further submitted that CISCE's activities should be viewed in their educational context rather than as commercial services. The fact that affiliation fees are collected should not, by itself, transform a statutory/educational regulatory function into a taxable supply.
The appellant relied upon decisions such as Rajiv Gandhi University, Madurai Kamaraj University, and other High Court judgments.
Department's contention
The Department argued that Section 2(17) contains an inclusive definition of “business” and that the absence of a profit motive is not determinative. CISCE was regularly providing identifiable services like grant of affiliation, continuation of affiliation, monitoring of compliance, registration and other administrative functions for specified fees. According to the Department, these were supplies made for consideration in the course or furtherance of business and were consequently taxable under Section 9. The Department argued that Section 2(17) contains an inclusive definition of “business” and that the absence of a profit motive is not determinative.
CISCE was regularly providing identifiable services like grant of affiliation, continuation of affiliation, monitoring of compliance, registration and other administrative functions for specified fees. According to the Department, these were supplies made for consideration in the course or furtherance of business and were consequently taxable under Section 9.
On the exemption issue, the Department submitted that Entry 66(b)(iv) is specific and limited to:
“services relating to admission to, or conduct of examination by, such institution.”
The expression cannot be expanded to include every activity remotely connected with education or examination. Affiliation precedes admission and examination and merely establishes the eligibility of a school to participate in the CISCE system. The Department argued that affiliation is a separate administrative function.
It involves:

examination of infrastructure;
verification of faculty;
assessment of governance;
checking prescribed standards; and
granting recognition to the school.

These functions occur before admission and examination and therefore cannot be treated as services relating directly to the conduct of examination.
The Department therefore submitted that affiliation is not a service relating directly to admission or conduct of examination and falls outside Entry 66(b)(iv).
Findings and Analysis of the Tribunal

CISCE's activities satisfy the ingredients of “supply”

The Tribunal made detailed analysis and examined Section 7(1)(a) which covers all forms of supply of goods or services and Section 2(17), defining “business”. It particularly noted that the definition is extremely wide and includes activities undertaken whether or not for pecuniary benefit. It also specifically includes activities undertaken by a club, association, society or similar body for subscription or other consideration.
On this basis, the Tribunal rejected the proposition that the absence of a profit motive or the educational/regulatory character of CISCE's activities would take them outside the definition of business. The Tribunal observed that CISCE:

provides affiliation, registration, examination and related services;
charges defined fees for those activities;
undertakes these activities regularly and continuously; and
provides identifiable services to schools against consideration.

Accordingly, the Tribunal held that the activities satisfy the statutory ingredients of Section 7(1)(a) read with Section 2(17) and therefore constitute “supply”.

Distinction between statutory universities and CISCE

A significant part of the Tribunal's reasoning was the distinction between statutory universities and CISCE. The Tribunal examined decisions concerning University of Mumbai, Goa University, Rajasthan Technical University and other universities. However, it held that those decisions arose in the context of universities created under specific Parliamentary or State legislation and exercising functions conferred upon them by statute. CISCE, on the other hand, is a society registered under the Societies Registration Act, 1860. It was not constituted by a legislative enactment and, according to the Tribunal, does not discharge a function made compulsory by statute. The Tribunal also noted that CISCE's fee structure is internally determined through its own financial mechanism. Therefore, according to the Tribunal, the ratio of judgments dealing with statutory universities cannot automatically be extended to CISCE. Accordingly, CISCE's affiliation activities constitute taxable supply.

Exemption notifications should be construed strictly

The Tribunal thereafter examined Entry 66(b)(iv) of Notification dated 28.06.2017.The relevant exemption covers:
“services relating to admission to, or conduct of examination by, such institution.”
The Tribunal placed substantial reliance upon the Constitution Bench judgment of the Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, (2018) 9 SCC 1. According to the Tribunal, Dilip Kumar conclusively establishes that:

an exemption notification under a fiscal statute must be strictly construed;
the burden lies upon the assessee to establish that its case falls within the exemption;
where there is ambiguity, the benefit goes to the Revenue; and
courts/tribunals cannot expand the exemption on equitable or purposive considerations.

Applying this principle, the Tribunal held that Entry 66(b)(iv) cannot be enlarged merely because affiliation may ultimately facilitate or enable students to undertake examinations.

Meaning of “services relating to admission or conduct of examination”

The Tribunal gave a restrictive interpretation to the expression “services relating to” in the context of the exemption. It held that the phrase could encompass services having a direct and immediate connection with the examination process, such as:

setting question papers;
conducting examinations;
invigilation;
declaration of results; and
issuance of certificates.

However, affiliation was held to be materially different.
The Tribunal reasoned that affiliation takes place before the examination process begins. It involves examination of the school's infrastructure, financial capacity and compliance with prescribed standards and culminates in grant or refusal of recognition. Thus, affiliation is essentially a threshold eligibility determination concerning the school, rather than a service directly involved in the conduct of examination.
Further, the Tribunal rejected an expansive interpretation of “relating to”. It reasoned that if every activity having some ultimate connection with examination were included, even activities such as appointment and payment of teachers could arguably be said to “relate to” examination because without teachers students could not become eligible to appear in examinations. Such an interpretation, would make the exemption virtually limitless and would obliterate the distinction between taxable and exempt services.

Affiliation is a separate and independent service

The Tribunal ultimately characterised affiliation as an independent service rendered by CISCE to the school.
It observed that:

affiliation is granted to the school as an institution;
the process involves evaluation of the school's infrastructure and financial capacity;
it determines whether the school satisfies the prescribed conditions;
it results in formal recognition/affiliation; and
the activity is undertaken before students are admitted and before examinations are conducted.

Therefore, affiliation is not a service rendered to students and is not directly connected with the conduct of examination and is an independent taxable supply.

Reliance placed on various Case Laws

The Tribunal held that decision of the Supreme Court in Bharathidasan University. The Supreme Court, while disposing of the SLPs, did not decide the substantive taxability of The Tribunal relied upon the Supreme Court's discussion of Kunhayammed & Ors. v. State of Kerala & Anr., (2000) 6 SCC 359, to hold that dismissal of an SLP does not necessarily result in merger or amount to affirmation of the High Court judgment on merits. Consequently, the earlier dismissal of the Revenue's SLP against the Karnataka High Court judgment in Rajiv Gandhi University could not be treated as an affirmation by the Supreme Court of the proposition that affiliation fees are necessarily exempt from GST. The Tribunal considered the Division Bench decision in Bharathidasan University and the earlier decision in Pondicherry University. The Madras High Court accepted the view taken in Pondicherry University that the affiliation fee does not fall within the exemption merely because affiliation is a prerequisite for admission and examination. The Tribunal found this reasoning consistent with its own interpretation of Entry 66(b)(iv). The Tribunal also noted the decision of the Telangana High Court in Care College of Nursing, which had distinguished the earlier Karnataka decisions and held that affiliation/inspection fees were not specifically covered by the GST exemption.

“As is where is” regularisation for July 2017 to June 2021

The Tribunal separately dealt with the period of ambiguity concerning the taxability of affiliation services.
It noted that the first appellate authority had already granted relief for the period July 2017 to June 2021, treating the matter as covered by the Government's “as is where is” regularisation. The Tribunal upheld this relief. It relied upon CBIC Circular No. 234/28/2024-GST dated 11.10.2024, which clarified that services of affiliation provided by Central/State educational boards, councils or similar bodies to schools are taxable, but GST payment on such affiliation services was regularised on an “as is where is” basis for the period 01.07.2017 to 17.06.2021.
Accordingly, the Tribunal confined the regularisation benefit to the specified period and sustained the taxability for the subsequent period commencing 18.06.2021.
Conclusion
The Tribunal held that affiliation-processing activities constitute “supply” and further held that affiliation is an independent taxable supply, not covered by Entry 66(b)(iv), since it is not a service directly relating to admission or conduct of examination. The Tribunal, however, upheld the “as is where is” regularisation for 01.07.2017 to 17.06.2021 and sustained the demand for the period 18.06.2021 to November 2023.
Issue IV: Whether annual registration charges and late registration charges are independent taxable supplies or are intrinsically connected with affiliation/examination functions and are eligible for exemption under the said Notification?
Appellants Contensions
The appellant contended that the annual registration charges and late annual registration charges are essentially in the nature of affiliation fees, as they are collected annually from affiliated schools for continuation of their affiliation. It was submitted that non-payment of such charges may result in de-affiliation of the school. Therefore, these charges cannot be treated as an independent taxable supply independent from the affiliation function.
It was further contended that since the annual registration charges are intrinsically connected with the continuation of affiliation, Appellate authority ought to have exempted the whole of the annual registration charges and late charges, not only for the period July 2017 to 17th June 2021 (as already exempted by the appellate authority in relation to affiliation charges), but also for the subsequent period 18th June 2021 to November 2023.
In rejoinder, the appellant also relied upon the decision in DG DGGSTI v. Rajiv Gandhi University of Health Sciences [(2024) 22 Centax 526 (Kar.)], submitting that annual renewal charges were also treated as exempt in that case. On this basis, it was argued that annual registration charges, being of the same nature as affiliation charges, should likewise receive the benefit of exemption.
Department’s Contention
The respondent submitted that annual registration charges and late registration charges constitute independent consideration collected for continuation and maintenance of the affiliation status of schools. These charges relate to continued monitoring, regulatory oversight, administrative processing and renewal of affiliation and are distinct from services relating to admission or conduct of examinations.
It was further submitted that Entry 66 of Notification No. 12/2017-CT (Rate) is a specific exemption entry and applies only to services expressly covered therein. Annual registration and late registration charges do not fall within the expression “services relating to admission to, or conduct of examination by, an educational institution.” Mere connection with continuation of affiliation cannot bring these charges within the exemption.
The respondent also disputed the appellant's contention that annual registration charges are identical to affiliation fees. Even if such charges were considered incidental to affiliation, the respondent contended that the taxability of affiliation services is a separate question and the registration and late registration charges remain liable to GST.
With regard to late registration charges, the respondent submitted that such charges arise on account of delayed compliance and constitute additional consideration. Reliance was placed upon Section 15(2)(d) of the CGST Act, under which interest, late fee or penalty for delayed payment of consideration forms part of the value of supply and is liable to GST at the same rate as the principal supply.
It was lastly contended that the appellant had failed to establish any specific exemption covering annual registration or late registration charges and that an exemption notification must be strictly construed, without extending the exemption by implication.
Findings and Analysis

Nature of the charges:
The Tribunal noted that annual registration charges are collected annually from affiliated schools, while late registration charges arise for payment beyond the prescribed deadline. These charges were held to be administrative and preparatory in nature and distinct from services relating to admission or conduct of examinations.

Scope of exemption under Entry 66(b)(iv):
Entry 66(b)(iv) is confined to services relating to admission to or conduct of examination. Applying the strict construction principle laid down in Dilip Kumar & Co., the Tribunal held that the exemption cannot be extended to administrative or preparatory activities merely because they facilitate the examination process. Annual registration and late registration charges are preparatory and administrative in character. Although registration involves collection of information such as the number of students, subjects and examination centres, these activities are not themselves the conduct of examination.

De-affiliation does not change the nature of the charges:
The fact that non-payment of annual registration charges may result in de-affiliation does not make the charges examination-related. De-affiliation is merely a contractual consequence of non-payment and does not alter the administrative character of the charges.

“As is where is” regularisation:

The Tribunal held that Circular No. 234/28/2024-GST specifically regularises affiliation services for the period 01.07.2017 to 17.06.2021. Since the Circular contains no reference to annual registration, renewal or late registration charges, its benefit cannot be extended to these charges by implication.

Reliance on Rajiv Gandhi University:

The Tribunal noted that the precedential value of Rajiv Gandhi University had already been considered by the Supreme Court in Bharathi Dasan. Accordingly, the said decision did not justify extending the exemption or regularisation to annual registration and late registration charges.
Conclusion
The Tribunal held that annual registration charges and late registration charges are independent administrative/preparatory supplies and do not qualify for exemption under Entry 66(b)(iv). The “as is where is” regularisation under Circular No. 234/28/2024-GST was also held to be confined to affiliation services and unavailable for these charges.
Issue V: Whether Circular No. 234/28/2024 dated 11.10.2024 is a valid and binding instrument regard being had to the appellant’s contentions that the said Circular has been quashed by certain Hon’ble High Courts or that Section 168 of the Act, 2017 does not confer upon the CBIC the power to interpret statutory provisions, and the Circular is to that extent ultra vires or that the Circular erroneously equates affiliation with accreditation and is for that reason inapplicable to CISCE; and whether, in any event, the demand on affiliation charges for the period 18.06.2021 to November 2023 is legally sustainable?
Contentions of the Appellant
The appellant contended that CBIC Circular No. 151/07/2021-GST dated 17.06.2021 and Circular No. 234/28/2024-GST dated 11.10.2024, to the extent they deny exemption to affiliation services, are ultra vires the CGST Act and the Exemption Notification. It was further contended that Circular No. 234/28/2024-GST had been quashed by the Karnataka High Court and the Bombay High Court and, therefore, could not be treated as a valid or binding instrument. The appellant also submitted that Section 168 of the CGST Act does not confer upon CBIC the power to interpret statutory provisions, such interpretative power belonging to the Courts. Reliance was placed upon Keshavji Ravji & Co. v. Commissioner of Income Tax, (1990) 183 ITR 1 (SC).
The appellant additionally argued that the Circulars proceed on an assumption that affiliation constitutes a “supply” without first establishing the jurisdictional fact necessary under Sections 7 and 9 of the CGST Act. It was also contended that the Circular erroneously equates affiliation with accreditation. According to the appellant, since CISCE provides affiliation and not accreditation, the Circular was inapplicable to its activities
Departments Contention
The respondent submitted that Circular No. 234/28/2024-GST was issued under Section 168 of the CGST Act for ensuring uniform implementation and continues to bind departmental officers. The respondent further submitted that judgments of the Karnataka and Bombay High Courts do not automatically bind authorities functioning outside their respective territorial jurisdictions. According to the respondent, the Circular merely clarifies the Department's understanding of Entry 66 of the Exemption Notification and does not create any new levy. Therefore, it was maintained that the Circular remained applicable to the departmental authorities and that the levy of GST on affiliation services was sustainable.
Findings and Analysis

Nature and basis of Circular No. 234/28/2024-GST

The Tribunal noted that Circular No. 151/07/2021-GST was issued pursuant to deliberations of the GST Council and under Section 168 of the CGST Act. Circular No. 234/28/2024-GST dated 11.10.2024 was subsequently issued pursuant to the specific recommendation of the 54th GST Council meeting held on 09.09.2024, expressly clarifying that affiliation services provided by educational boards to schools are taxable and regularising the liability on an “as is where is” basis for the period 01.07.2017 to 17.06.2021.
The Tribunal rejected the appellant's contention that the Circular was invalid because Section 168 does not confer an interpretative power upon CBIC. It held that Circular No. 234/28/2024 was not issued on the basis of any claimed power of statutory interpretation but to operationalise the specific recommendation of the 54th GST Council. Therefore, the same is binding.

Distinction between affiliation and accreditation

The Tribunal distinguished the concepts of accreditation and affiliation. Accreditation ordinarily involves quality assessment, grading or authorisation by an independent body, whereas CISCE affiliation integrates a school into the CISCE examination system and requires compliance with its curriculum and academic norms. Without CISCE affiliation, students cannot appear for ICSE/ISC examinations or receive CISCE certificates. The Tribunal therefore accepted, to this limited extent, the appellant's factual contention that CISCE affiliation is different from accreditation. However, it held that this distinction does not affect the applicability of Circular No. 234/28/2024 because the Circular specifically addresses affiliation services of educational boards and does not depend upon equating affiliation with accreditation.

Effect of the Karnataka and Bombay High Court decisions

The Tribunal took note of the appellant's submission that Circular No. 234/28/2024 had been quashed by the Karnataka and Bombay High Courts. While acknowledging the persuasive value of those decisions, the Tribunal held that it was bound by the Constitution Bench decision in constitution Bench of the Hon’ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [(2018) 9 SCC 1], which requires strict construction of exemption notifications and resolution of ambiguity in favour of Revenue. The Tribunal also noted that the taxability of affiliation services had been specifically considered by the GST Council and reflected in Circular No. 234/28/2024 read with Notification No. 08/2024-Central Tax (Rate) dated 08.10.2024.
Importantly, the Tribunal further held that the demand for the period post-June 2021 was independently sustainable on the taxability findings recorded under Issues II and III, even without relying upon Circular No. 234/28/2024.

Pending challenge before the Delhi High Court

The Tribunal also considered the appellant's submission regarding pendency of Writ Petition before the Delhi High Court challenging Circular Nos. 151/07/2021-GST and 234/28/2024-GST. The Tribunal noted, however, that the writ petition was still pending and the order was only an interlocutory prima facie observation, with the matter listed for further hearing on 16.11.2026.
Conclusion
The Tribunal held that Circular No. 234/28/2024-GST dated 11.10.2024 retains binding effect upon departmental authorities and that the appellant's challenge to its applicability was not sustainable. In any event, the GST demand on affiliation charges for the post-June 2021 period was independently sustainable on the taxability findings under Issues II and III, even without relying upon the Circular.
Issue no VI:
Whether the amounts collected by the appellant, if taxable, are to be treated as inclusive of GST under Rule 35 of the Rules 2017
CONTENTIONS OF THE APPELLANT
The appellant contended that, if the amounts collected by CISCE are held taxable, the same ought to be treated as inclusive of GST under Rule 35 of the CGST Rules, 2017. It was submitted that where a consolidated amount is collected for provision of taxable services and no tax is separately recovered from the recipient, the gross amount received should be treated as cum-tax value. The appellant relied upon the decision of Commissioner of Central Excise & Customs, Patna v. Advantage Media Consultant, 2008 (3) TMI 59 – CESTAT Kolkata, and submitted that the Revenue's appeal against the said decision was dismissed by the Hon’ble Supreme Court.
Departments Contentions
The respondent contended that Rule 35 applies only where it is established that the price charged was inclusive of GST and that the burden of proving such inclusiveness lies upon the supplier claiming the benefit. It was specifically submitted that the appellant had not produced invoices, agreements, fee notifications, accounting records or correspondence demonstrating that the amounts collected were GST-inclusive. According to the respondent, the mere absence of a separate GST component in the fee structure cannot create a presumption that the consideration included GST.
Findings and Analysis
Scope of Rule 35 and Applicability of cum-tax principle under GST

The Tribunal first analysed Rule 35 of the CGST Rules, 2017 and observed that where the value of supply is inclusive of tax, the tax component is required to be worked backwards by applying the prescribed tax fraction. The Tribunal relied upon the Supreme Court's decision in Commissioner of Central Excise, Delhi v. Maruti Udyog Ltd., Appeal (Civil) No. 3783 of 2000, decided on 27.02.2002, wherein it was held that where the price is a cum-duty price, the element of duty incorporated in the sale price has to be excluded for determining the assessable value.

Reliance on decision of Advantage Media Consultant

The Tribunal also considered the decision of CESTAT, Kolkata in Commissioner of Central Excise, Patna v. Advantage Media Consultant, 2008 (10) S.T.R. 449 (Tri.-Kol.), wherein it was held that where the amount realised from the recipient does not separately indicate or include the tax component, the gross amount received is to be treated as the cum-tax value and the tax liability is required to be re-quantified accordingly. The Tribunal noted that the Revenue's appeal against the said decision was dismissed by the Supreme Court.

Burden of proof regarding GST inclusiveness

The Tribunal rejected the respondent's contention that the appellant was required to independently establish GST inclusiveness through invoices, agreements and other documents. Relying upon M/s Uniworth Textiles Ltd. v. Commissioner of Central Excise, Raipur, (2013) 9 SCC 753, the Tribunal held that the burden cannot be placed upon a party to prove a negative in the manner suggested by the respondent. The Tribunal observed that the burden of establishing mala fides lies upon the person alleging the same.
Conclusion
The Tribunal ultimately held that where tax has not been collected separately, the gross amount received is to be treated as inclusive of tax for quantification of the tax liability. It found that the appellant had discharged the burden in law once it was demonstrated that no GST was separately collected from the recipients. Accordingly, applying Rule 35 read with the settled judicial principles, the Tribunal held that the amounts collected by the appellant were inclusive of GST and that the appellant was entitled to the benefit of cum-tax valuation.
Issue VII
Whether invocation of Section 74 is justified and whether CBIC Instruction No. 5/2023-GST dated 13.12.2023 has been complied with?
Contentions of the Appellant
The Appellant submitted that Section 74 could not be invoked merely because tax was not paid. The issue was interpretational and the Appellant was under a bona fide belief that its activities were exempt. There was no fraud, wilful misstatement or suppression with intent to evade tax.
It was particularly submitted that the Department was already aware of the Appellant’s activities and receipts. The Department had called for details vide letter dated 01.03.2023, which were furnished by the Appellant on 15.03.2023 and 27.03.2023, followed by a demand letter dated 08.05.2023. Thus, the Department possessed the relevant information much before the investigation dated 05.12.2023.
Reliance was also placed on CBIC Instruction No. 5/2023-GST dated 13.12.2023, which clarifies that Section 74 cannot be invoked merely for non-payment of GST and requires positive material evidence of fraud, wilful misstatement or suppression with intent to evade tax.
Contentions of the Department
The Respondent submitted that the Appellant had not disclosed the receipts as taxable in its GST returns and had failed to discharge its self-assessed liability. According to the Respondent, the liability came to light only through investigation and therefore the material facts had been suppressed.
It was further submitted that the existence of books of account or disclosures on the website did not amount to statutory disclosure, and that the Appellant had neither sought an advance ruling nor clarification. The earlier Service Tax litigation was also relied upon to contend that the Appellant was aware of the taxability of the receipts.
Findings of the Tribunal
The Tribunal held that mere non-payment of tax is not sufficient for invoking Section 74(1). Fraud, wilful misstatement or suppression of facts with intent to evade tax must be affirmatively established. Relying upon Pushpam Pharmaceuticals, Continental Foundation, and Lipi Boilers, the Tribunal held that suppression must be deliberate and intended to evade tax. Where the relevant facts are already known to the Department, mere failure to disclose or self-assess cannot, by itself, constitute suppression.
The Tribunal found that the earlier Service Tax dispute did not establish an intention to evade GST. The issue was genuinely contested, and the subsequent regularisation of affiliation services by the GST Council on an “as is where is” basis also demonstrated the existence of interpretational uncertainty.
Most importantly, the Department was already in possession of specific information regarding the Appellant’s receipts through its correspondence in March and May 2023, much before the investigation. Therefore, the Tribunal held that the necessary ingredient of deliberate suppression was absent.
The Tribunal also considered CBIC Instruction No. 5/2023-GST dated 13.12.2023 and held that the material relied upon by the Respondent did not constitute the positive material evidence contemplated by the Instruction. Reliance was also placed on various case laws.
Conclusion
The Tribunal held that fraud, wilful misstatement or suppression of facts with intent to evade tax were not established for the period July 2017 to August 2018. Consequently, the extended period under Section 74(1) was unavailable.
Issue VII:
Whether levy of interest under Section 50 and penalties under Section 122 of the CGST Act, 2017 are sustainable?
The Tribunal decided Issue VIII partly in favour of the Appellant and partly in favour of the Respondent, depending upon the period and the underlying tax demand.

CA Pradeep Jain_

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GST update /2026-27/0083

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CA Pradeep Jain_

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