Haj Group Organizers Are Not Performing Religious Ceremonies, Can't Claim GST Exemption : Supreme Court

The Supreme Court has held that Haj Group Organisers (HGOs) or Private Tour Operators(PTOs) cannot seek exemption from the Goods and Services Tax(GST) for their services as per the Mega Exemption Notification issued under the GST Act(All India Haj Umrah Tour Organizer Association Mumbai v. Union of India And Ors)The notification provided exemption for "conduct of any religious ceremony" as stated in its Clause 5(b). The Court said that HGOs are not conducting any religious ceremony by themselves and are only facilitating the Haj pilgrimage.Haj pilgrimage is a five-day religious pilgrimage to Mecca and nearby Holy places in Saudi Arabia. A bilateral agreement is executed every year between the Government of India and the Kingdom of Saudi Arabia to enable Haj pilgrims of India to undertake the pilgrimage. The said agreement sets out a certain number of pilgrims, who can undertake Haj from India. 30% of this quota is allocated to HGOs and the rest is assigned to the Haj Committee, which is a statutory bodyHGOs render services such as, purchasing flight tickets, arranging and making payments for accommodation in Saudi Arabia, arranging and making available food during their stay in Saudi Arabia, arranging and making payments for transportation in Saudi Arabia and providing foreign exchange in the form of Saudi Riyals.The Court held that HGOs cannot be held to be performing any religious ceremony."The service rendered by HGOs to Haj pilgrims is to facilitate them to reach at the destination to perform rituals/religious ceremonies. No religious ceremony is performed or conducted by the HGOs. The religious ceremony is conducted by Haj pilgrims or by someone else in the Kingdom of Saudi Arabia", the Court observed."...adverting to sub-clause (b) of Section 5, we find that the exemption has been granted in respect of services by a person by way of conduct of any religious ceremony. Thus, it refers to a person who is naturally the service provider. The sub- Clause (b) applies when the service provider renders service by way of conduct of any religious ceremony. The notification does not say that service provided to the service receiver to enable him to conduct religious ceremony, has been exempted. It only exempts service provided by way of conduct of any religious ceremony", the Court explained.The Court also noted that another clause in the Mega Exemption Notification, Clause 5B, exempted "services by a specified organisation in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement". The specified organizations as per this clause are Kumaon Mandal Vikas Nigam Limited (which organizes the Kailash-Manasarovar Yatra) and Haj Committee (a statutory body).Therefore, the Court noted that the notification clearly makes a distinction between "conduct of any religious ceremony" and "services in respect of a religious pilgrimage" and only specified organizations can claim exemption for the latter."If the intention and object was to provide service tax exemption to services provided by HGOs in respect of religious pilgrimage, the notification would have specifically provided so. However, the exemption as regards religious pilgrimage has been confined only to the services rendered by the specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India under a bilateral arrangement. An exemption has not been provided to any other service provider rendering service in respect of a religious pilgrimage. Whereas, sub-Clause (b) of Clause 5 is applicable to services rendered by way of conduct of any religious "ceremony". A clear distinction has been made between a service provided in respect of religious pilgrimage and a service rendered by way of conduct of any religious ceremony"The Court cited an example to explain its position :"We may give an example of a person engaging a priest to perform certain religious ceremonies or ritual or puja on his behalf. In such a case, the priest renders service by way of conducting a religious ceremony. The service rendered by HGOs to Haj pilgrims is to facilitate them to reach at the destination to perform rituals/religious ceremonies.No religious ceremony is performed or conducted by the HGOs. The religious ceremony is conducted by Haj pilgrims or by someone else in the Kingdom of Saudi Arabia".A Bench comprising Justices A.M. Khanwilkar, A.S. Oka and C.T. Ravikumar was deciding a batch of petitions filed by a number of Haj Group Organizers (HGOs) or Private Tour Operators (PTOs) seeking exemption from service tax (now, GST) for Haj and Umrah services offered by them to Indian pilgrims travelling to Saudi Arabia.Services of HGOs cannot be bifurcated as within India and abroadThe Court observed that the services rendered by the Haj Group Organizers (HGOs) to the Indian Haj pilgrims cannot be bifurcated into two parts - services provided...

Haj Group Organizers Are Not Performing Religious Ceremonies, Can't Claim GST Exemption : Supreme Court

Sohini Chowdhury

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