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2024 Supreme(Ker) 709
IN THE HIGH COURT OF KERALA AT ERNAKULAM
HON’BLE MR. JUSTICE DINESH KUMAR SINGH, J.
Indian Medical Association, Kerala State Branch – Petitioner
Versus
Union of India, Rep. by the Secretary, Department of Revenue, New Delhi – Respondent
W.P. (C) Nos. 21297, 23853 of 2023
Decided On : 23-07-2024
Advocate Appeared:
For the Petitioners: George Varghese, Manu Srinath, Nimesh Thomas, Sreelakshmi R. Nair.
For the Respondents: Muhamed Rafiq, Shaiju K.S.
Important Points
Subject
Taxation - Goods and Services Tax
Act Referred
CENTRAL GOODS AND SERVICES TAX RULES: R.159
CONSTITUTION OF INDIA: Art.19(4), Art.14, Art.19(1)(a), Art.19(1)(b), Art.19(1)(c), Art.19(1)(d), Art.19(1)(e), Art.19(1)(f), Art.19(1)(g), Art.19(2), Art.19(3), Art.19(5), Art.19(6), Art.20, Art.21, Art.22, Art.226, Art.246(a), Art.265, Art.276, Art.300(a), Art.31(a), Art.366(12)(a), Art.366(29)(a)
FINANCE ACT: S.1(2), S.108, S.7(1)(aa)
GENERAL CLAUSES ACT: S.3(42)
INCOME TAX ACT: S.12(aa)
PROVINCIAL INSOLVENCY ACT: S.53
Headnote
| Table of Content |
|---|
| 1. connected petitions addressing gst constitutionality. (Para 1) |
| 2. petitioner's association structure and functions (Para 2 , 3 , 4 , 5 , 6) |
| 3. details of financial schemes and mutual support (Para 7 , 8 , 9 , 10 , 11) |
| 4. explanation of proposed professional support mechanisms (Para 12 , 13 , 14 , 15 , 16) |
| 5. argument on the principle of mutuality recognized in law (Para 20 , 21 , 22 , 23 , 24) |
| 6. amendments to tax provisions and their implications (Para 26 , 27 , 29 , 30) |
| 7. constitutional and legislative competence. (Para 34) |
| 8. government's authority on tax definitions and enforcement (Para 39 , 40 , 41 , 42) |
| 9. judicial interpretation of legislative power and tax capacity (Para 44 , 45 , 46) |
| 10. court’s interpretation of legislative power. (Para 50) |
| 11. judicial perspective on retrospective amendments in law (Para 52 , 54 , 55) |
| 12. retrospective application of tax laws. (Para 60 , 61 , 62 , 63) |
| 13. conclusion on the gst levy. (Para 70 , 72 , 74) |
| 14. court holds on mutuality and constitutional powers for taxation. (Para 73) |
| 15. final ruling on the constitutionality of the contested provisions (Para 76 , 77) |
JUDGMENT :
DINESH KUMAR SINGH, J.
1. Both these writ petitions are connected and heard together and are disposed of by the common judgment.
2. W.P(C) No. 21297 of 2023 has been filed praying for a Declaration that Section 2 (17)(e) and Section 7 (1)(aa) and explanation thereto of the Central Goods and Service Tax Act, 2017 and corresponding provisions of Kerala Goods and Services Act 2017 are ultra-virus. Article 246A read with Article 366 (12A) and violative of Articles 14, 19(1) (g), Articles 265 and 300A of the Constitution of India; in the alternative the prayer has been made to issue a Declaration that the retrospective effect from 01.07.2017 of Section 7 (1) (aa) as unconstitutional and violative of Articles 14, 19 (1) (g) Articles 265 and 300A of the Constitution of India.
3. The petitioner’s case is that the petitioner is an association under the provisions of the Travancore – Cochin Literary Scientific & Charitable Societies Registration Act, 1955. Only qualified modern medical practitioners with a valid registration in the State of Kerala under the Travancore Cochin Medical Practitioners Act, 1953 (predecessor Act of the Kerala State Medical Practitioners Act, 2021) are eligible to become members of the petitioner association.
4. Members are admitted to the petitioner association on payment of one-time admission fee. There are no shareholders. No dividends are declared, and there is no distribution of profits. Membership is not transferable. Membership can be terminated under certain specified circumstances. It is submitted that in the event of dissolution of the petitioner association, the property of the association is not allowed to be distributed among the members of the petitioner association but is to be given to any other nonprofit organisation. It is further stated that the admission of a member in the petitioner association does not involve the rendering of any service to attract the GST on the contribution/admission fee.
5. It is also said that the petitioner association was formed in line with Part II, Rule 6 of the rules of the National Indian Medical Association, which was founded in 1928 and registered as a Society in Calcutta. Each State has its association which is registered under the respective state laws. The petitioner association holds an Income Tax Permanent Account Number and is registered under Section 12AA of the INCOME TAX ACT , 1961.
6. The petitioner association is like a club formed to promote medical science, upholding the interests of the medical profession, guiding government bodies in evolving a health policy for the state and in implementing it, formulating schemes and projects for the welfare of members of the association, their families and the general public, helping in proper disposal of Biomedical waste, etc.
7. The petitioner runs various mutual beneficial schemes for the be
