CESTAT Bengaluru: No Service Tax on Alumni Fees Without Service Nexus, ₹97 Lakh Demand Quashed

April 24, 2026 : The Bengaluru Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that alumni fees collected by a university cannot be subjected to service tax in the absence of any identifiable service rendered in return, setting aside a demand exceeding ₹97 lakh raised against Manipal Education & Medical Group India Pvt. Ltd.

The appeal arose from Order-in-Original dated 25 November 2016 passed by the Commissioner of Central Excise and Service Tax, Mangaluru, confirming service tax liability on alumni fees collected by Sikkim Manipal University.

A Bench comprising Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member) allowed the appeal and held that the essential requirement for levy of service tax — a clear nexus between service rendered and consideration received — was absent in the present case.

The appellant, Manipal Education & Medical Group India Pvt. Ltd., was engaged in providing education-related support services to Sikkim Manipal University, including assistance in admissions, development of course content, e-learning facilitation, and operational support. These services were governed by a detailed agreement under which the appellant received a predetermined share of tuition fees.

The dispute arose when the Department sought to include alumni fees collected by the University within the taxable value of services rendered by the appellant. It alleged that such fees formed part of the consideration for education auxiliary services and were therefore liable to service tax.

Rejecting this contention, the Tribunal undertook a detailed examination of the agreement between the parties and found that the scope of services provided by the appellant was confined strictly to academic, technological, and administrative support functions. There was no contractual obligation or activity connected with alumni or ex-students.

The Tribunal observed that “the services rendered by the appellant does not relate to alumni services to the ex-students… therefore, alleging that the Alumni Fee… should be included in the gross taxable value, in the absence of any service by the appellant, cannot be sustained.”

It further emphasised that service tax is leviable only where a service is provided in exchange for consideration. In the present case, alumni fees were collected independently by the University without any corresponding service being rendered by the appellant, thereby breaking the essential service–consideration nexus required for taxation.

The Bench also relied on its earlier ruling in the case concerning Sikkim Manipal University, where it was held that alumni fees collected without rendering any service are not taxable. Reaffirming this principle, the Tribunal noted that contributions made towards alumni associations are typically voluntary in nature and not linked to any specific service.

On the issue of limitation, the Tribunal found that the extended period of limitation had been wrongly invoked. It noted that all material facts were within the knowledge of the Department, and the appellant had consistently filed service tax returns and undergone periodic audits. Consequently, allegations of suppression of facts were held to be unsustainable.

In view of these findings, the Tribunal set aside the impugned order and allowed the appeal both on merits and on limitation, granting consequential relief to the appellant.

Cause Title: Manipal Education & Medical Group India Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Mangaluru
Case No.: Service Tax Appeal No. 20077 of 2017
Coram: Dr. D.M. Misra (Judicial Member) and R. Bhagya Devi (Technical Member)