1. Dispute over service tax and GST liability of private tour operators providing Haj pilgrimage packages and the applicability of exemptions under the Finance Act and IGST Act. (Para 1 , 2 , 3 , 36 , 37 , 38 )
Back
Next 
2022 Supreme(SC) 676
SUPREME COURT OF INDIA
A.M. Khanwilkar, Abhay S. Oka, C.T. Ravikumar, JJ.
All India Haj Umrah Tour Organizer Association Mumbai – Appellant
Versus
Union of India & Ors. – Respondents
Writ Petition (C) No. 755 of 2020 with Writ Petition (C) No. 781 of 2020; Writ Petition (C) No. 907 of 2020; Writ Petition (C) No. 772 of 2020; Writ Petition (C) No. 882 of 2020; Writ Petition (C) No. 809 of 2020; Writ Petition (C) No. 940 of 2020; Writ Petition (C) No. 855 of 2020; Writ Petition (C) No. 977 of 2020; Writ Petition (C) No. 856 of 2020; Writ Petition (C) No. 860 of 2020; Writ Petition (C) No. 896 of 2020; Writ Petition (C) No. 989 of 2020; Writ Petition (C) No. 1034 of 2020; Writ Petition (C) No. 1014 of 2020; Writ Petition (C) No. 1329 of 2020 and Writ Petition (C) No. 1431 of 2020
Decided On : 26-07-2022
Important Points
HGOs/PTOs are liable for service tax/GST as the place of provision is the recipient's residence in India. Exemption for 'conducting religious ceremonies' doesn't apply to facilitation services. Distinguishing commercial HGOs from statutory Haj Committees is a reasonable classification under Article 14 of the Constitution.
Subject
Tax Law - Indirect Tax (Service Tax/GST)
Act Referred
CONSTITUTION OF INDIA: Art.14, Art.25, Art.286(1)(b)
FINANCE ACT: S.114, S.64, S.66(b)
HAJ COMMITTEE ACT: S.2, S.9
INCOME TAX ACT: S.10(23bba), S.12(aa)
Integrated Goods and Services Tax Act: S.12, S.13, S.2(14), S.5(1)
Place of Provision of Services Rules: R.14, R.2(h), R.3, R.4, R.7, R.8, R.9
RESERVE BANK OF INDIA ACT: S.45(aa)
rules: R.2(i)(b)(iv)
SERVICE TAX RULES: R.4
FINANCE ACT: S.114, S.64, S.66(b)
HAJ COMMITTEE ACT: S.2, S.9
INCOME TAX ACT: S.10(23bba), S.12(aa)
Integrated Goods and Services Tax Act: S.12, S.13, S.2(14), S.5(1)
Place of Provision of Services Rules: R.14, R.2(h), R.3, R.4, R.7, R.8, R.9
RESERVE BANK OF INDIA ACT: S.45(aa)
rules: R.2(i)(b)(iv)
SERVICE TAX RULES: R.4
Headnote
The issue in this group of writ petitions is about the liability of Haj Group Organizers (HGOs) or Private Tour Operators (PTOs) to pay service tax on the service rendered by them to Haj pilgrims for the Haj pilgrimage.
Fact of the Case:
The Haj pilgrimage is undertaken by thousands of pilgrims from India, either through the Haj Committee of India (for short, the Haj Committee') or HGOs. There is a bilateral treaty between India and the Kingdom of Saudi Arabia. As per the said bilateral arrangement, the Haj pilgrimage can be undertaken from India only through the Haj Committee or HGOs. Some of the HGOs and PTOs filed petitions in this Court to challenge the levy of service tax on the service regarding the Haj pilgrimage. By the order dated 11th December 2019 passed in Writ Petition (C) No.977 of 2014, this Court directed the petitioners to make a representation to the Government of India for grant of exemption from service tax. Accordingly, a detailed representation was made by some of the petitioners on 19th December 2019. The GST Council by the order dated 14th March 2020, rejected the representation on the basis of the recommendation of the Fitment Committee.
Finding of the Court:
The service rendered by HGOs to Haj pilgrims is taxable for service tax as the service to Haj pilgrims is provided or agreed to be provided in taxable territory. The service is rendered by providing or agreeing to provide Haj pilgrimage tour package. The exemption granted under the Mega Exemption Notification will not apply in this case. The Haj Committee constitutes a separate class by themselves, which is based on a rational classification which has a nexus with the object sought to be achieved.
Issues: Whether the service rendered by HGOs and PTOs to Haj pilgrims for the Haj pilgrimage is liable to service tax? Whether the exemption granted under the Mega Exemption Notification will apply in this case? Whether the Haj Committee constitutes a separate class by themselves?
Ratio Decidendi: The service rendered by HGOs to Haj pilgrims is taxable for service tax as the service to Haj pilgrims is provided or agreed to be provided in taxable territory. The service is rendered by providing or agreeing to provide Haj pilgrimage tour package. The exemption granted under the Mega Exemption Notification will not apply in this case. The Haj Committee constitutes a separate class by themselves, which is based on a rational classification which has a nexus with the object sought to be achieved.
Final Decision: The petitions are devoid of merit and the same are, accordingly, dismissed.
Legal Category Hierarchy
Advocate Appeared:
For the Appellant :Rohit Amit Sthalekar, Haris Beeran, Mushtaq Salim, Usman Ghani Khan, Azhar Assees, Pallavi Pratap, Zulfiker Ali P. S, Rashmi Nandakumar, Sulaiman Mohd. Khan, Ainul Ansari, Rajat Bhardwaj, Taiba Khan, Sunil Khatwani, Durai Raj, Naveena, Raghunatha Sethupathy, P. Soma Sundaram, Advocates
For the Respondent:Mukesh Kumar Maroria, B. Krishna Prasad, Advocates
For the Appellant :Rohit Amit Sthalekar, Haris Beeran, Mushtaq Salim, Usman Ghani Khan, Azhar Assees, Pallavi Pratap, Zulfiker Ali P. S, Rashmi Nandakumar, Sulaiman Mohd. Khan, Ainul Ansari, Rajat Bhardwaj, Taiba Khan, Sunil Khatwani, Durai Raj, Naveena, Raghunatha Sethupathy, P. Soma Sundaram, Advocates
For the Respondent:Mukesh Kumar Maroria, B. Krishna Prasad, Advocates
Table of Contents
2. Petitioners claim exemption for conducting religious ceremonies and allege discrimination under Article 14; Revenue contends services are commercial and provided within the taxable territory. (Para 8 , 10 , 12 , 14 , 16 , 17 , 18 , 20 , 22 , 23 , 25 , 26 , 27 , 28 , 29 , 30 , 31 )
3. The court found the place of provision to be India based on the recipient's residence and distinguished between facilitating a pilgrimage and conducting a religious ceremony. (Para 34 , 35 , 39 , 40 , 41 , 42 , 43 , 46 , 47 , 51 , 52 , 53 , 54 , 55 )
4. Taxability depends on the recipient's residence; facilitating pilgrimage is not conducting a ceremony; statutory non-profit bodies constitute a separate class from commercial operators for tax exemptions. (Para 39 , 43 , 52 , 58 , 60 )
5. The writ petitions are dismissed as devoid of merit. (Para 66 , 67 )
6. How is the place of provision of services determined for unregistered recipients under the service tax and IGST regimes?
The place of provision is the location of the service recipient. For unregistered individuals, this is their usual place of residence. If the recipient resides in India, the service is deemed provided in the taxable territory, making it subject to tax. (Para 39 , 43 , 55 )
7. Does an exemption for the conduct of a religious ceremony apply to services facilitating a religious pilgrimage?
No. Facilitating a pilgrimage—such as arranging travel, accommodation, and food—is distinct from conducting a religious ceremony. The exemption applies only when the service provider actually performs the religious ceremony, not when they merely enable the recipient to do so. (Para 51 , 52 , 53 , 54 )
8. Is it discriminatory under Article 14 to grant tax exemptions to statutory bodies while denying them to private operators providing similar services?
No, provided there is an intelligible differentia. Statutory bodies with non-profit motives, government control, and broader welfare duties constitute a separate class from commercial operators, creating a rational nexus with the object of the exemption. (Para 57 , 58 , 60 , 62 , 65 )
JUDGMENT
Abhay S. Oka, J.
The broad question involved in this group of writ petitions is about the liability of Haj Group Organizers (HGOs) or Private Tour Operators (PTOs) to pay service tax on the service rendered by them to Haj pilgrims for the Haj pilgrimage.
FACTUAL ASPECTS
2. The Haj pilgrimage is undertaken by thousands of pilgrims from India, either through the Haj Committee of India (for short, the Haj Committee') or HGOs. There is a bilateral treaty between India and the Kingdom of Saudi Arabia. As per the said bilateral arrangement, the Haj pilgrimage can be undertaken from India only through the Haj Committee or HGOs.
3. The service tax regime was introduced in India in the year 1994 under the provisions of the Finance Act, 1994 (for short the Finance Act'). Initially, very few services were made subject to payment of service tax. However, by subsequent Finance Acts, a large number of services were added to the list from time to time. The total number of services subjected to service tax exceeded 100. A negative list regime was introduced by Act No.23 of 2012 with effect from 1st July 2012. By Act No.23 of 2012, Sections 66-B and 66-C were added. Section 66-B is the charging Section which provided that there shall be a levy of service tax at the rate of 12% on the value of all services other than those specified in the negative list. By amending Section 66-B, the percentage of service tax was enhanced to 14%. Section 66-C confers power on the Central Government to frame rules for determining the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. Accordingly, the Place of Provision of Services Rules, 2012 (for short, the 2012 Rules') were framed which came into force with effect from 1st July 2012. On 20th June 2012, Mega Exemption Notification no.25 of 2012ST (for short, the Mega Exemption Notification') was issued containing several exemptions. Paragraph 5(b) of the Mega Exemption Notification provided for the exemption on services by a person by way of conduct of any religious ceremony. Paragraph 5A of the Mega Exemption Notification provided for the exemption to services by specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement. The Mega Exemption Notification defines specified organisations as Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking and the Committee or State Committee as defined in Section 2 of the Haj Committee Act, 2002 (for short, the 2002 Act'). With effect from 1st July 2017, under the provisions of the Integrated Goods and Services Tax Act, 2017 (for short, the IGST Act'), the same service tax regime was continued. Identical exemption notification dated 28th June 2017 (for short, the IGST Exemption Notification') was issued by exercising the powers under the IGST Act. Identical Exemption Notification was also issued on the same date (for short, the GST Exemption Notification') under the Central Goods and Services Tax Act, 2017 (for short, the GST Act').
4. Some of the HGOs and PTOs filed petitions in this Court to challenge the levy of service tax on the service regarding the Haj pilgrimage. By the order dated 11th December 2019 passed in Writ Petition (C) No.977 of 2014, this Court directed the petitioners to make a representation to the Government of India for grant of exemption from service tax. Accordingly, a detailed representation was made by some of the petitioners on 19th December 2019. The GST Council by the order dated 14th March 2020, rejected the representation on the basis of the recommendation of the Fitment Committee. The said decision was communicated by the Government of India by a letter dated 5th May 2020.
5. Most of the writ petitions in the current batch of petitions have been filed by various organisations representing HGOs/PTOs. Only one petition, i.e. Writ
