Performance of Haj is A Sacred Religious Ceremony, Not Appropriate To Term It As A Commercial Activity: Sr. Adv. Arvind Datar Argues Before Supreme Court

The Supreme Court on Wednesday resumed hearing on a string of petitions filed by various tour operators and state Haj 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.At previous hearing, 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.The court-room exchange as it transpired on Wednesday is as follows-Senior Advocate Arvind Datar, for the petitioners: "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"Justice Khanwilkar: "If the services are provided in Saudi Arabia is a question of fact. In a writ jurisdiction, we cannot decide that. And whether the services are religious ceremony is also question of fact and will be decided on a case to case basis as to which will deserve exemption"Mr. Datar: "Your lordships had allowed us to make a representation to the government, to the ministry. Your Lordships had said 'Let the ministry give a finding as to whether it is a religious ceremony or not'. The order of the government is now like a quasi-judicial order. Your lordships were kind enough to give us liberty to challenge it once again. Today, there is a finding of fact that the performance of Haj is not a religious ceremony, it is a commercial activity. That is now subject to your lordships' judicial review. They say that after 2012, and after 2017 (GST regime), if the person providing the service and the Muslim gentleman taking the service are both in India and the payment is made in India, it is a service in India and therefore liable to tax"Justice Khanwilkar: "the contract for providing services is completed there?"Mr. Datar: "No. Unlike income tax. in service tax law, the residence is not relevant and location is relevant. Location is nomen juris. I may be in Delhi, but for certain purposes, my location may be where the business establishment is, or where the services is provided. In income tax, wherever I am residing, if I am in India for more than 182 days, then I am liable to tax"Justice Khanwilkar: "should we not focus on only if it is a religious ceremony and exempted?"Mr. Datar: "In the impugned order, the government has given a finding, a fact-finding, on the fact that the service is provided in India"Indicating the GST Mega Exemption notification, Mr. Datar advanced that Services by a person by way of- renting of precincts of a religious place meant for general public, or conduct of any religious ceremony; and 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 are exempted.Justice Khanwilkar: "exemption should be asked for by the recipient that I am not liable"Mr. Datar: "there is no question of my asking. If the service tax is leviable, it is leviable. For example, hospital is exempt. Then the hospital in the bill cannot charge service tax. The patient need not pay. Similarly when I am going to Haj, I need not pay the 18% service tax. The question is, is Haj a religious ceremony at all? Because I am going for Haj pilgrimage. Is the performance of Haj a religious ceremony? They have taken the stand that it is only a commercial activity. They say when you go to Badrinath, Kedarnath etc,...

Performance of Haj is A Sacred Religious Ceremony, Not Appropriate To Term It As A Commercial Activity: Sr. Adv. Arvind Datar Argues Before Supreme Court

Mehal Jain

Tags