[BREAKING] Supreme Court dismisses pleas by tour operators against GST on Hajj, Umrah

The Supreme Court on Tuesday dismissed petitions filed by various private tour operators seeking exemption from Goods and Service Tax (GST) for Hajj and Umrah services offered by them to pilgrims travelling to Saudi Arabia. .The judgment was pronounced by a bench of Justices AM Khanwilkar, AS Oka and CT Ravikumar on seventeen petitions filed by various tour operators and State Haj organisers challenging differential GST levied which gets passed on to Hajj pilgrims..The tour operators had challenged the levy of GST on Hajis who avail services offered by registered private tour operators on the ground that no tax law can be applicable on extra territorial activities as per Article 245 of the Constitution. They had also argued that the levy is discriminatory as it exempts certain hajis who undertake the pilgrimage through the Haj Committee of India..The court noted that the Haj Committee of India receive charges from Haj pilgrims for the entire package and that it was not the case of the HGOs that they charge separately for different services forming a part of the comprehensive package.“Only a part of the package cannot be picked up for invoking exemption. A particular service rendered cannot be divided into parts. For the purposes of levy of service tax, the service rendered cannot be dissected like this. The service rendered as a whole by the HGOs to the Haj pilgrims will have to be taken into account,” the court ruled. The top court held that the service is rendered by providing a package for the Haj Pilgrimage to the service recipient who is located in the taxable territory and that is how the service provided by HGOs is taxable for service tax. The apex court clarified that in matters of grant of exemptions in tax matters, latitude has to be given to the decision making. “Ultimately, it is also a matter of policy. We have already held that there is a rational basis for classifying specified organisations as a class and keeping out the Private Tour Operators from exemption under Clause 5A. We will have to show judicial self-restraint in this case,” reads the judgment..The top court held that the service is rendered by providing a package for the Haj Pilgrimage to the service recipient who is located in the taxable territory and that is how the service provided by HGOs is taxable for service tax.The apex court clarified that in matters of grant of exemptions in tax matters, latitude has to be given to the decision making.“Ultimately, it is also a matter of policy. We have already held that there is a rational basis for classifying specified organisations as a class and keeping out the Private Tour Operators from exemption under Clause 5A. We will have to show judicial self-restraint in this case,” reads the judgment..A GST levy of 5 per cent (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..The petitioners, represented by advocate Haris Beeran, had argued that the journey is also part of the religious ceremony and cannot be separated from the pilgrimage, and is thus eligible for exemption. Besides, these amenities are provided in Saudi Arabia and outside the tax regime in India, it was contended. It was also their argument that Haj and Umrah privileges are part of the religious ceremony..Senior Counsel Arvind Datar, who also represented the petitioners, had argued that unlike pilgrimages by Hindus to Kashi or Badrinath, Hajj was obligatory for adherents of Islam.After counsel for the government objected to such references, Justice Khanwilkar had said,"[Such] comparison can draw into debate everything. Being rationalist is part of being Hindu."Datar had argued that under the existing scheme, tax benefits are only granted to those availing the government quota, while the 30 per cent of others have to pay tax towards facilitating Hajj..[Read Judgment].Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.