In this research paper the methodological development of a new model, namely SQM-HEI (Service Quality Measurement in Higher Education in India) for the measurement of service quality in higher educational institutions is developed. Three dimensions are arrived namely Teaching Methodology(TM), Environmental Change in Study Factor (ECSF) and Disciplinary Action(DA). The Placement is considered as the mediating factor for the outcome of education. For conducting an empirical study, data were collected from final year students of higher educational institutions across Tamilnadu. 1600 valid questionnaires were used for the analysis. The SQM-HEI captures the authentic determinants of service quality within the higher education sector. The developed 30-item instrument has been empirically tested with AMOS 7.0. The developed model is tested for Structural Equation Model and Bayesian estimation and testing. The SEM model output reveals that the RMSEA=0.049, GFI= 0.987 and NFI = 0.928. all the fit indices concludes the best fit of the model. The results from the current study are crucial because previous studies have produced scales that bear a resemblance to the generic measures of service quality, which may not be totally adequate to assess the perceived quality in higher education.