'Haj Group Organisers Cannot Claim GST Exemption Under 'Service By Way of Conduct of Religious Ceremony': ASG Submits Before Supreme Court

The Supreme Court on Thursday resumed hearing on a string of petitions filed by various tour operators and state Hajj organisers on differential GST levied on Haj pilgrims.The tour operators are challenging the levy of GST on Hajis who avail themselves of services offered by registered private tour operators on the grounds that no tax law can be applicable on extra territorial activities per Article 245 of the Constitution. They also argued that the levy is discriminatory as it exempts certain hajis who undertake the pilgrimage through the Haj Committee of India. A GST levy of 5% (with input tax credit) is applicable on air travel by pilgrims who utilise the services of non-scheduled/charter operations for religious pilgrimage facilitated by the Centre under bilateral arrangements. However, if the services of a specified organisation in respect of a religious pilgrimage is facilitated by the External Affairs Ministry under bilateral arrangement, the rate would be nil.On April 7, the bench of Justices A. M. Khanwilkar, A. S. Oka and C. T. Ravikumar was informed by ASG N. Venkataraman that the issue of extraterritoriality in taxation has been heard for over a month by another 3-judge bench of the Supreme Court and the judgment is reserved. Justice Khanwilkar had then put to Senior Advocate Arvind Datar, for the petitioners, that if the arguments are confined to the aspect of exemption on grounds of religious ceremony, the bench may address it immediately, but as regards extraterritoriality, the bench would await the decision of the coordinate bench. Mr. Datar had then agreed.On Wednesday, Senior Advocate Arvind Datar, for the petitioners, had advanced, "The revenue's stand is that if the person providing the service, the person receiving the service and the consideration paid is in India, it is liable to tax. Secondly, they say that Haj is not a religious ceremony, it is a commercial activity. It is our submission that the service is provided in Saudi Arabia. Even if your lordships come to the conclusion that the service is rendered in India, then we are exempt by virtue of being a religious ceremony and it does not matter where it is provided"Indicating the GST Mega Exemption notification, Mr. Datar had advanced that the following services are exempt- "5. Services by a person by way of-(a) renting of precincts of a religious place meant for general public (...) or(b) conduct of any religious ceremony;5A. 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 court-room exchange as it transpired on Thursday is as follows-ASG N. Venkataraman: "The terms relevant are 'pilgrim', 'pilgrimage', 'HGO/PTO'. Threshold requirement in service tax law is a service provider, a service receiver, provision of service from the provider to the receiver, backed by a consideration. It is a contract driven law. HGO is only a service provider, service facilitator. The pilgrim is the recipient. It is the pilgrim who undertakes the pilgrimage. It has nothing to do with the HGO or the PTO because this pilgrimage is something which is so personal to the pilgrim, he has to follow ruthlessly the tenets prescribed by the religion. PTOs/HGOs are not trying to perform or provide any of those services which has relation to the pilgrim performing his religious rites. They are mere facility providers, picking them up, taking them to Haj"Justice Khanwilkar: "They collect the amount as facility providers which the pilgrim is going to spend there in the religious ceremony? So that amount has to be excluded- that is the ultimate substance of the argument of the petitioners"ASG: "The intricate, one-on-one rites which the pilgrim personally is doing are not being outsourced to anybody. Every arrangement to perform- that is the facility provided by the PTO, and for which the pilgrims or the recipients do not enter into direct contract with anybody outside India. The pilgrims may travel from Trivandrum or Chennai to Bombay by flight, they also stay based on their comfort level in a particular place, nearby or far away, a guide is appointed who takes them to the respective religious heads to do their rites. At every point of time, it is only in the nature of a facility. This is an all in one, complete package, start to finish. If you choose to go, then you go in this way. The first point is pilgrims are recipients, PTOs are service providers or facility providers in the sense that they ultimately take the pilgrim to the place of worship but the worship or the ritual has to be performed by the pilgrim as instructed by the religious head. At no point of time does it reach the domain of performing a religious ceremony"He indicated that the Mega Exemption notification excludes 'Services by a person by way of conduct of religious ceremony'. "It does not say 'providing a facility to conduct a religious ceremony'. We can't read it ...

'Haj Group Organisers Cannot Claim GST Exemption Under 'Service By Way of Conduct of Religious Ceremony': ASG Submits Before Supreme Court

Mehal Jain

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