# ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION MUMBAI v. UNION OF INDIA & ORS

- **Citation:** [2022] 17 S.C.R. 92
- **Court:** Supreme Court of India
- **Decided:** 2022-07-26
- **Bench:** A.M. Khanwilkar, Abhay S. Oka, C.T. Ravikumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/all-india-haj-umrah-tour-organizer-association-mumbai-v-union-of-india-ors-35763
- **Pages:** 59

## Headnote

Haj matters:
Integrated Goods and Services Tax Act, 2017 - ss. 2(14),5(1),
12, 13 -Place of Provisions of Services Rules, 2012 - rr. 2, 3, 4, 7,
and 8 -Petitioners-Hajj group organizers (HGO) and Private Tour
operators (PTO) rendering service to Haj pilgrims for the Haj
pilgrimage for performing the religious activity of Haj/Umrah -
Liability to pay service tax -Plea of the petitioners that if the location
of the service recipient is outside the taxable territory, service tax
cannot be levied; and that the levy is discriminatory as it exempts
certain hajis who undertake the pilgrimage through the Haj
Committee - Held: Service rendered by the HGOs or PTOs to Haj
Pilgrims is taxable for service tax as the service to Haj pilgrims is
provided or agreed to be provided in a taxable territory - As regards
exemption to Haj Committee, the Haj Committee is a statutory
committee which is entrusted with various functions for the welfare
of Haj pilgrims-Profit motive is completely absent in the case of the
Haj Committee-Thus, the Haj Committee constitutes separate class
in itself as distinguished from HGOs when it comes to rendering
service to Haj pilgrims - There is an intelligible differentia for this
classification-No part of the package offered by HGOs involves a
service by way of conduct of any religious ceremony - Thus, the
sub-clause (b) of clause 5 of the Mega Exemption Notification cannot
be invoked by the HGOs - Exemption under sub-clause (b) of clause
5 is to the service provider-HGOs have no role to play in actual
conduct of religious ceremonies which are a part of Haj pilgrimage
- 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 HGOsReligious ceremony is conducted by Haj pilgrims or by someone
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else in the Kingdom of Saudi Arabia -Thus, exemption under clause
5A is not applicable to HGOs -Mega Exemption Notification no.25
of 2012-ST.
Dismissing the writ petitions, the Court
HELD: 1.1: The provisions of the Place of Provisions of
Services Rules, 2012 and the relevant provisions of Integrated
Goods and Services Tax Act, 2017 are to a great extent pari
materia. As far as the location of service provider in this case
(HGOs) is concerned, there is no dispute that all of them have to
be registered under Rule 4 of the Service Tax Rules, 1994 and
therefore, as per sub-clause (a) of clause (h) of Rule 2, the location
of HGO will be the premises for which registration has been
granted to HGO. Such premises are necessarily in India. Even
assuming that any other sub-clauses of clause (h) are applicable,
the location of the service provider, in this case, will be in India.
As far as the location of service receiver under clause(i) of Rule
2 is concerned, in this case, the service receiver is the Haj pilgrim
who is obviously not registered. Therefore, sub- clause (a) of
clause (i) will have no application. There are four categories listed
in sub-clause (b) of clause (i) of Rule 2. The first category is of
business establishments. The second category is of services which
are used at a place other than the business establishment. The
third category is where services are used at more than one
establishment. On the face of it, the cases of Haj pilgrims
undertaking the Haj pilgrimage through HGOs will not be covered
by these three categories. What is applicable to them is the fourth
category which is the usual place of residence of the recipient of
service. It is not the place where the service recipient receives
service or is rendered service. It is the place of ordinary
residence of the service recipient which, in this case, will be in
taxable territory. As provided in Rule 3, the place of provision of
service is the location of the recipient of service. In this case,
the recipients of service from HGOs are Indian residents and
accordingly, their place of residence in India will be the pl

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 [2022] 17 S.C.R. 92
92
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION
MUMBAI
v.
UNION OF INDIA & ORS.
(Writ Petition (C) No. 755 of 2020)
JULY 26, 2022
[A.M. KHANWILKAR, ABHAY S. OKA AND
C.T. RAVIKUMAR, JJ.]
Haj matters:
Integrated Goods and Services Tax Act, 2017 - ss. 2(14),5(1),
12, 13 -Place of Provisions of Services Rules, 2012 - rr. 2, 3, 4, 7,
and 8 -Petitioners-Hajj group organizers (HGO) and Private Tour
operators (PTO) rendering service to Haj pilgrims for the Haj
pilgrimage for performing the religious activity of Haj/Umrah -
Liability to pay service tax -Plea of the petitioners that if the location
of the service recipient is outside the taxable territory, service tax
cannot be levied; and that the levy is discriminatory as it exempts
certain hajis who undertake the pilgrimage through the Haj
Committee - Held: Service rendered by the HGOs or PTOs to Haj
Pilgrims is taxable for service tax as the service to Haj pilgrims is
provided or agreed to be provided in a taxable territory - As regards
exemption to Haj Committee, the Haj Committee is a statutory
committee which is entrusted with various functions for the welfare
of Haj pilgrims-Profit motive is completely absent in the case of the
Haj Committee-Thus, the Haj Committee constitutes separate class
in itself as distinguished from HGOs when it comes to rendering
service to Haj pilgrims - There is an intelligible differentia for this
classification-No part of the package offered by HGOs involves a
service by way of conduct of any religious ceremony - Thus, the
sub-clause (b) of clause 5 of the Mega Exemption Notification cannot
be invoked by the HGOs - Exemption under sub-clause (b) of clause
5 is to the service provider-HGOs have no role to play in actual
conduct of religious ceremonies which are a part of Haj pilgrimage
- 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 HGOsReligious ceremony is conducted by Haj pilgrims or by someone
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else in the Kingdom of Saudi Arabia -Thus, exemption under clause
5A is not applicable to HGOs -Mega Exemption Notification no.25
of 2012-ST.
Dismissing the writ petitions, the Court
HELD: 1.1: The provisions of the Place of Provisions of
Services Rules, 2012 and the relevant provisions of Integrated
Goods and Services Tax Act, 2017 are to a great extent pari
materia. As far as the location of service provider in this case
(HGOs) is concerned, there is no dispute that all of them have to
be registered under Rule 4 of the Service Tax Rules, 1994 and
therefore, as per sub-clause (a) of clause (h) of Rule 2, the location
of HGO will be the premises for which registration has been
granted to HGO. Such premises are necessarily in India. Even
assuming that any other sub-clauses of clause (h) are applicable,
the location of the service provider, in this case, will be in India.
As far as the location of service receiver under clause(i) of Rule
2 is concerned, in this case, the service receiver is the Haj pilgrim
who is obviously not registered. Therefore, sub- clause (a) of
clause (i) will have no application. There are four categories listed
in sub-clause (b) of clause (i) of Rule 2. The first category is of
business establishments. The second category is of services which
are used at a place other than the business establishment. The
third category is where services are used at more than one
establishment. On the face of it, the cases of Haj pilgrims
undertaking the Haj pilgrimage through HGOs will not be covered
by these three categories. What is applicable to them is the fourth
category which is the usual place of residence of the recipient of
service. It is not the place where the service recipient receives
service or is rendered service. It is the place of ordinary
residence of the service recipient which, in this case, will be in
taxable territory. As provided in Rule 3, the place of provision of
service is the location of the recipient of service. In this case,
the recipients of service from HGOs are Indian residents and
accordingly, their place of residence in India will be the place of
provision of service. Rule 8 provides that where the location of
the provider of service as well as that of the recipient of service
is in the taxable territory, the place of provision of service is the
location of the recipient of service. Hence, in this case, the place
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of provision of service is the location of the service receiver in
accordance with clause (i) of Rule 2 which will be in taxable
territory. [Para 39][130-C-H; 131-A]
1.2 Rule 4 is applicable to performance based service which
provides that the place of provision of two services set out in the
said Rule shall be the location where services are actually
performed. Clause (a) of Rule 4 is applicable to services provided
in respect of goods which obviously will not apply in the present
case. The petitioners are relying upon clause (b) of Rule 4. The
title of Rule 4 suggests that it is applicable to performance based
services. HGOs do not render performance based services
looking to the nature of the services they render. Therefore,
Clause (b) of Rule 4 will not apply to HGOs. What will apply is
Rule 3 which will mean that the place of provision of the service
shall be the location of the recipient of service in accordance
with Rule 2(i)(b)(iv). Thus, service is rendered by HGOs to the
Haj pilgrims within taxable territory. That is how the charging
section will apply.[Para 40][131-A-D]
1.3 Religious ceremonies and religious functions are not
covered by Rule 6. The words 'similar events' will have to be
construed ejusdem generis. Hence, the Haj pilgrimage cannot
be an event. Even if we assume that the service rendered by
HGOs to Haj pilgrims is transportation service, by virtue of Rule
9 of the 2012 Rules, the place of provision of service will be the
location of service provider. In view of sub-Section (10) of Section
12 of the IGST Act, the place of supply of service will be the
place where the passenger embarks.[Paras 41 and 42][131-F-G]
1.4 As per Item (iv) of sub-clause (b) of Clause (i) of Rule 2
of the said Rules of 2012, the location of the service receiver will
be the usual place of residence of the Haj pilgrim in India.
Therefore, the service rendered by the HGOs to Haj Pilgrims is
taxable for service tax as the service to Haj pilgrims is provided
or agreed to be provided in taxable territory. The service is
rendered by providing or agreeing to provide Haj pilgrimage tour
package.[Para 44][131-G-H; 132-A]
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1.5 The Exemption Notifications under the IGST and the
GST Acts so far as the Haj pilgrimage is concerned, are pari
materia with the Mega Exemption Notification. It is, therefore,
necessary to advert to the Mega Exemption Notification. The
Mega Exemption Notification contains a list of services which
are exempted from service tax leviable under Section 66B. Ex
facie, Clause 5A will have no application as it is applicable to
services by specified organisations in respect of a religious
pilgrimage facilitated by the Ministry of External affairs of the
Government of India under bilateral arrangement. The specified
organisations have been defined in paragraph 1(1)(a)(zfa) of the
Mega Exemption Notification. Specified organisations, as stated
therein, are only two categories of organisations. The first one is
Kumaon Mandal Vikas Nigam Limited, a Government of
Uttarakhand Undertaking and Haj Committee or State Committee
under the said Act of 2002. The Haj Committee renders services
in relation to the Haj pilgrimage which is facilitated by the Ministry
of External Affairs of the Government of India under the bilateral
arrangement with the Kingdom of Saudi Arabia.[Paras 46 and
47][132-E-F; 133-B-C]
1.6 Adverting to sub-clause (b) of Section 5, it is found 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.[Para 51][136-D]
1.7 Clause 5A of the same Mega Exemption Notification
grants exemption to the service rendered by Haj Committees in
respect of a religious pilgrimage. Thus, the same Mega
Exemption Notification makes a clear distinction between
'religious ceremony' and 'religious pilgrimage'. As Haj
Committees render services only in respect of Haj pilgrimage,
the religious pilgrimage referred to in Clause 5A as regards the
Haj Committee, is Haj pilgrimage. Thus, the Mega Exemption
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Notification exempts the two specified organisations that render
services in respect of a religious pilgrimage. This exemption
under Clause 5A is not applicable to HGOs as the HGOs are not
the specified organizations. 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 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. According to us, there is absolutely no ambiguity in subclause (b) of clause 5 and therefore, there is no occasion to apply
the test laid down by this Court in the case of Mother Superior
Adoration Convent case. [Para 52][136-E-H; 137-A-C]
1.8 The submission was that in Haj pilgrimage there are
six entities involved which include concerned Ministry of the
Kingdom of Saudi Arabia, the Government of India, Tawafa
establishments, Molliums, approved HGOs and Haj pilgrims; that
the word 'person' used in sub-clause (b) of clause 5 of the
exemption notification will also include the plural of the term
'person'; and that that a Haj pilgrim will fall in the category of
'person'. This submission is completely fallacious. The word
'person' used in Clause 5 refers to a service provider and not to
the receiver of service. Even assuming that some services are
provided by the Kingdom of Saudi Arabia, the Government of
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India, Tawafa establishments or Maollims to Haj pilgrims from
India, it may be noted here that they are not subjected to payment
of service tax. The service tax is levied on HGOs being service
providers. The real question is whether HGOs are rendering
service by way of conduct of any religious ceremony. HGOs have
no role to play in actual conduct of religious ceremonies which
are a part of Haj pilgrimage. The service rendered by HGOs is
by way of providing air bookings, arranging for the stay of Haj
pilgrims in Saudi Arabia, arranging for food while they are in Saudi
Arabia, arranging for foreign exchange and arranging registration
with Tawafa establishment in the Kingdom of Saudi Arabia.[Para
53][137-D-G]
1.9 An attempt was made to bifurcate the services rendered
by HGOs into two parts. The first part is of the service rendered
regarding providing air booking and making available foreign
exchange. A submission was made that service tax or GST will
be payable on these two items and for the rest of the services
rendered, service tax or GST will not be payable as the services
rendered are outside the taxable territory. HGOs render service
to Haj pilgrims in respect of the Haj pilgrimage by providing a
single package which consists of several parts such as making
air booking, providing foreign exchange and making
arrangements for stay and catering in Saudi Arabia, etc. HGOs
offer a comprehensive package of services relating to Haj
pilgrimage. They receive charges from Haj pilgrims for the entire
package. It is 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. This is apart from the fact that
no part of the package offered by HGOs involves a service by
way of conduct of any religious ceremony. Therefore, sub-clause
(b) of clause 5 of the Mega Exemption Notification cannot be
invoked by the HGOs. The exemption under sub-clause (b) of
clause 5 is to the service provider. [Para 54][137-H; 138-A-E]
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1.10 With effect from 1st July 2017, service tax became
payable under the IGST Act. Even GST Act came into force from
the same date. Under both the enactments, tax is payable on the
supply of goods or services. Sub-Section (2) of Section 13 of IGST
Act provides that the place of supply of services except services
specified in Sub-Sections (3) to (13) shall be the location of the
recipient of services. Under sub- Section (1) of Section 5 of the
IGST Act, service tax is payable on services supplied inter-state.
Under sub-Section (1) of Section 9 of the GST Act, service tax is
leviable on services supplied intra-state. None of the sub-sections
(3) to (13) of Section 13 of the IGST Act is applicable in this case.
Clause (14) of Section 2 of the IGST Act defines the location of
the recipient of service. This provision is pari materia with the
same definition under the 2012 Rules. As in case of 2012 Rules,
there are four categories. The service received from HGOs in
connection with the Haj pilgrimage falls in the fourth category
which lays down that the location of the recipient of service will
be the location of usual place of residence of the recipient. Similar
are the provisions in GST Act except that the service tax is
leviable on services supplied intra-State. Therefore, as far as the
services rendered by HGOs are concerned, there is no material
change brought about by the GST and the IGST Acts except for
the fact that the service tax is chargeable under these two statutes
and not under the Finance Act. Thus, the HGOs supply service
to the service recipient having location in India. The service is
rendered by providing a package for the Haj Pilgrimage to the
service recipient who is located in the taxable territory. That is
how the service provided by HGOs is taxable for service tax.
[Para 55][138-E-H; 139-A-C]
1.11 The question is whether Haj Committees under the
2002 Act, can be treated as a separate class. Article 14 does not
prohibit the classification of persons or class of persons provided
it is not arbitrary. The classification has to be reasonable. The
classification is permissible provided it is founded on an
intelligible differentia which must distinguish the persons grouped
together from those who are left out. Moreover, the classification
must have a rational nexus to the objects sought to be achieved
by it. While we examine this question in the context of the
infringement of Article 14 of the Constitution of India, it must be
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remembered that only on the ground that both HGOs and the
Haj Committee render service to the same class of persons, the
classification made by treating the Haj Committee as a separate
class, cannot be questioned. In a given case, different classes of
service providers may be rendering the same service to the same
class of service recipients. That, per se, does not amount to
discrimination. The attack on the ground of discrimination will
have to be considered in the context of taxable persons namely,
the Haj Committee and HGOs. Under Section 3 of the said Act
of 2002, the Haj Committee of India was constituted. Similarly,
under Section 17, the State Haj Committees were constituted.
Both the categories of Haj Committees are body corporate,
having perpetual succession and a common seal with the power
to acquire, hold and dispose of movable and immovable
properties. Section 4 determines the composition of the Haj
Committee of India and Section 18 determines the composition
of State Haj Committees. Section 9 lays down the duties of the
Haj Committee. [Para 57][139-E-H; 140-A-C]
1.12 Under Section 27 of the 2002 Act, it is the duty of the
State Committees to implement the policies and directions of
the Haj Committee and perform prescribed duties. The functions
and duties assigned to the Haj Committee need to be considered
in the context of the preamble of the 2002 Act. The object is to
establish Committees for making arrangements for the Muslims
for the pilgrimage of Haj. The HGOs are otherwise the tour
operators carrying on business of arranging tours. They get
themselves registered as HGOs. As can be noticed from Section
9, the functions of the Haj Committee are not confined only to
making arrangements for enabling the pilgrims to undertake the
Haj pilgrimage. Its first duty is to collect and disseminate the
information useful to the pilgrims and to arrange orientation and
training programmes for the pilgrims. It is the duty of the Haj
Committee to give relief to pilgrims and visitors. It is its duty to
generally look after the welfare of the pilgrims. The Haj
Committee has an important duty to assist the pilgrims in distress.
One of the duties is to finalize the Annual Haj Plan with the
approval of the Central Government and to execute the same.
The Haj Committee is under an obligation to publish proceedings
of the Committee. Under Section 30, it is the duty of the
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Committee to create Central Haj Fund. Similarly, under Section
32, the State Committees are under an obligation to create State
Haj Funds. The Central Government has the powerto reconstitute
the Haj Committee and to remove the Chairperson, the ViceChairperson and the Members of the Committee. There is a
similar power vesting in the State Government in respect of the
State Committees. Thus, the Haj Committees are statutory bodies
working under the control and supervision of the Government.
The Haj Committees are the agencies and instrumentalities of
the State. Apart from arranging visits of Haj pilgrims for the
purposes of Haj pilgrimage, there are important statutory duties
assigned to the Haj Committee which we have set out above. As
per clause (b) of Section 30, money collected from pilgrims for
the performance of the Haj pilgrimage becomes a part of the
Central Haj Fund, which can be utilized only for the purposes
specified under Section 31. The funds can be used only for the
purposes of paying salary and allowances to the officers and
employees of the Committee and for payment of charges and
expenses incidental to the objects specified in Section 9. Other
expenditure can be made only with the approval of the Central
Government. Therefore, when the Haj Committee facilitates the
Haj pilgrims by making arrangements for their visit to the
Kingdom of Saudi Arabia for undertaking the Haj pilgrimage,
there is a complete absence of profit motive. On the contrary,
the money received by the Haj Committee from the Haj pilgrims
goes to the statutory fund, which in turn, has to be used inter alia
for the benefit of Haj pilgrims. Even the budget of the Haj
Committee is required to be submitted to the Central
Government. Thus, the Central Government has all pervasive
control over the Haj Committee. The State Governments have
the same control over the State Committee. On the other hand,
there are no onerous duties attached to HGOs. They earn profit
by rendering service to Haj pilgrims. Except for the stringent
conditions for the registration, the Government has no control
over HGOs.[Para 58][141-B-D; 142-A-C]
1.13 The Haj Committee is a statutory committee which is
entrusted with various functions for the welfare of Haj pilgrims.
Moreover, the profit motive is completely absent in the case of
the Haj Committee. The money received by the Haj Committee
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from the pilgrims for rendering service goes to a statutory fund
created under the 2002 Act which is to be used only for the
purposes specified in the 2002 Act. That is the reason why the
Haj Committee constitutes a class in itself when it comes to
rendering service to Haj pilgrims. It is a separate class as
distinguished from HGOs. There is an intelligible differentia for
this classification. The object of exemption in paragraph 5A of
the Mega Exemption Notification is to promote the activity of
the specified organisations of rendering service for the religious
pilgrimage. Both the organisations which are specified in the
notification are statutory organisations over which the
Government has an effective control. Moreover, the service
rendered by the specified organisations to the devotees is not
with the object of making profit. Therefore, there is a nexus
between the classification made and the object sought to be
achieved by granting exemptions.[Para 60][143-H; 144-A-D]
1.14 In the meeting of the Fitment Committee, there were
deliberations on the representation made by the petitioners. The
decision/recommendation of the Fitment Committee contains valid
reasons for making a distinction between HGOs and Haj
Committees. [Para 62][144-F-G]
1.15 In the matter 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. Judicial self-restraint is shown in this case.[Para 64][150-B]
1.16 The arguments based on discrimination have no
substance at all, as HGOs and the Haj Committees do not stand
on par and in fact, the Haj Committees constitute a separate class
by themselves, which is based on a rational classification which
has a nexus with the object sought to be achieved. Therefore,
there is no merit in the challenge in the petitions. [Paras 65 and
65][150-C-D]
Union of India & Ors. v. Rafique Shiekh Bhikan and
Anr. (2012) 6 SCC 265; Federation Haj PTOs of India
v. Union of India (2019) 2 SCALE 460: [2019] 2 SCR
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627; Government of Kerala & Anr. v. Mother Superior
Adoration Convent (2021) 5 SCC 602; Cox & Kings
India Ltd. v. Commissioner of Service Tax, New Delhi
2014 (35) S.T.R. 817; Rustom Cavasjee Cooper v.
Union of India (1970) 1 SCC 248 : [1970] 3 SCR 530;
In Re the Special Courts Bill 1978 (1979) 1 SCC 380 :
[1979] 2 SCR 476; Kunnathat Thatehunni Moopil Nair,
etc. v. State of Kerala &Anr. 1961 AIR 552 : [1961] 3
SCR 77; East India Tobacco Company, etc. v. State of
Andhra Pradesh &Anr. 1962 AIR 1733 : [1963] 1 SCR
404; Vivian Joseph Ferriera & Anr. v. Municipal
Corporation of Greater Bombay & Ors. 1972 (1) SCC
70 : [1972] 2 SCR 257; Jaipur Hosiery Mills (P) Ltd.,
Jaipur v. State of Rajasthan &Ors. (1970) 2 SCC 26 :
[1971] 1 SCR 396; M. Jhangir Bhatusha & Ors. v.
Union of India & Ors. (1989) Suppl. 2 SCC 201 : [1989]
3 SCR 356; Bharat Surfactants (Private) Ltd. &Anr. v.
Union of India & Anr. (1989) 4 SCC 21: [1989] 3 SCR
367; P.M. Ashwathanarayana Setty & Ors. v. State of
Karnataka &Ors. (1989) Suppl. 1 SCC 696 : [1988] 3
SCR Supl. 155; Sanghvi Jeevraj Ghewar Chand &Ors.
v. Secretary, Madras Chillies Grains & Kirana
Merchants Workers Union & Anr. AIR 1969 SC 530 :
[1969] 1 SCR 1 366; Bangalore Water Supply &
Sewerage Board v. Workmen of Bangalore Water Supply
& Sewerage Board & Ors. 1994 (2) LLN 1239; Union
of India &Ors. v. Bengal Shrachi Housing Development
Ltd. and Anr. (2018) 1 SCC 311 : [2017] 14 SCR 347;
R.C. Jall v. Union of India (1962) AIR 1281 : [1962] 3
Suppl. SCR 436; Commissioner of Customs (Import)
Mumbai v. Dilip Kumar and Company and Ors. (2018)
9 SCC 1 : [2018] 7 SCR 1191; Commissioner of
Customs (Preventive) Mumbai v. M. Ambalal and
Company (2011) 2 SCC 74 : [2010] 15 SCR 937; Quinn
v. Leathem, 1901 AC 495 (HL); State of Orissa v.
Sudhansu Sekhar Misra AIR 1968 SC 647 : [1968] 2
SCR 154; R.K. Garg v. Union of India (1981) 4 SCC
675 : [1981] 1 SCR 947; Sun Export Corpn. v. Collector
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of Customs, (1997) 6 SCC 564 : [1997] 1 Suppl. SCR
434; All-India Federation of Tax Practitioners & Ors.
v. Union of India & Ors. (2007) 7 SCC 527: [2007] 9
SCR 147; Atlas Tours and Travels Pvt. Ltd. v.
Commissioner of Service Tax, Mumbai 2015-TIOL-306CESTAT-MUM; S. K. Dutta, Income Tax Officer v.
Lawrence Singh Ingty (1968) AIR 658 : [1968] 2 SCR
165- referred to.
Morey v. Doud [351 US 457 : 1 L Ed 2d 1485 (1957)-
referred to.
Case Law Reference
[2019] 2 SCR 627
referred to
Para 9
[1970] 3 SCR 530
referred to
Para 21
[1979] 2 SCR 476
referred to
Para 21
[1961] 3 SCR 77
referred to
Para 21
[1963] 1 SCR 404
referred to
Para 21
[1972] 2 SCR 257
referred to
Para 21
[1971] 1 SCR 396
referred to
Para 21
[1989] 3 SCR 356
referred to
Para 29
[1989] 3 SCR 367
referred to
Para 29
[1988] 3 SCR Supl. 155
referred to
Para 29
[1969] 1 SCR 1 366
referred to
Para 29
[2017] 14 SCR 347
referred to
Para 30
[1962] 3 Suppl. SCR 436
referred to
Para 30
[2018] 7 SCR 1191
referred to
Para 48
[1968] 2 SCR 154
referred to
Para 49
[2010] 15 SCR 937
referred to
Para 49
[1981] 1 SCR 947
referred to
Para 62
CIVIL ORIGINAL JURISDICTION : Writ petition (c) no.755 of
2020
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION
MUMBAI v. UNION OF INDIA
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(Under Article 32 Of The Constitution of India)
With
Writ petition (c) nos.781, 907, 772, 882, 809, 940, 855, 977, 856,
860, 896, 989, 1034, 1014, 1329 and 1431 of 2020
Arvind P. Datar, Gopal Sankaranarayanan, Sr. Advs., Durai Raj,
Kotal Harshavardhan, Ms. Rashmi Nandakumar, Rahul Unnikrishnan,
Kshitij Maheshwari, Ms. Aishwary Jain, Y. Arunagiri, Ms. Naveena,
Ms. Tanya Srivastava, Shankar Narayanan, Harish Beeran, Mushtaq
Salim, Usman Ghani Khan, Azhar Assees, Ms. Pallavi Pratap, Sayid
Marzook Bafaki, Faisal M. Aboobacker, Zulfiker Ali P. S., Rajat
Bhardwaj, P. Soma Sundaram, Rohit Amit Sthalekar, Advs. for the
Petitioner.
N. Venkataraman, ASG, Ms. Shraddha Deshmukh, Ms. Sonia
Mathur, Ms. Aakansha Kaul, V. Chandra Shekhar B., H. R. Rao, Durga
Dutt, Amith J., Ashok Kumar, Manek Singh, Aman Sahani, Amrish Kumar,
Mukesh Kumar Maroria, Advs. for the Respondents.
The Judgment of the Court was delivered by
ABHAY S. OKA, J.
1. The broad question involved in this group of writ petitions is
about the liability of Haj Group Organizers (HGOs) or Private Tour
Operators (PTOs) to pay service tax on the service rendered by them to
Haj pilgrims for the Haj pilgrimage.
FACTUAL ASPECTS
2. The Haj pilgrimage is undertaken by thousands of pilgrims from
India, either through the Haj Committee of India (for short, 'the Haj
Committee') or HGOs. There is a bilateral treaty between India and the
Kingdom of Saudi Arabia. As per the said bilateral arrangement, the Haj
pilgrimage can be undertaken from India only through the Haj Committee
or HGOs.
3. The service tax regime was introduced in India in the year
1994 under the provisions of the Finance Act, 1994 (for short 'the Finance
Act'). Initially, very few services were made subject to payment of
service tax. However, by subsequent Finance Acts, a large number of
services were added to the list from time to time. The total number of
services subjected to service tax exceeded 100. A negative list regime
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was introduced by Act No.23 of 2012 with effect from 1st July 2012. By
Act No.23 of 2012, Sections 66-B and 66-C were added. Section 66-B
is the charging Section which provided that there shall be a levy of service
tax at the rate of 12% on the value of all services other than those
specified in the negative list. By amending Section 66-B, the percentage
of service tax was enhanced to 14%. Section 66-C confers power on
the Central Government to frame rules for determining the place where
such services are provided or deemed to have been provided or agreed
to be provided or deemed to have been agreed to be provided.
Accordingly, the Place of Provision of Services Rules, 2012 (for short,
'the 2012 Rules') were framed which came into force with effect from
1st July 2012. On 20th June 2012, Mega Exemption Notification no.25 of
2012-ST (for short, 'the Mega Exemption Notification') was issued
containing several exemptions. Paragraph 5(b) of the Mega Exemption
Notification provided for the exemption on services by a person by way
of conduct of any religious ceremony. Paragraph 5A of the Mega
Exemption Notification provided for the exemption to services by
specified organisations in respect of a religious pilgrimage facilitated by
the Ministry of External Affairs of the Government of India, under bilateral
arrangement. The Mega Exemption Notification defines specified
organisations as Kumaon Mandal Vikas Nigam Limited, a Government
of Uttarakhand Undertaking and the Committee or State Committee as
defined in Section 2 of the Haj Committee Act, 2002 (for short, 'the
2002 Act'). With effect from 1st July 2017, under the provisions of the
Integrated Goods and Services Tax Act, 2017 (for short, 'the IGST Act'),
the same service tax regime was continued. Identical exemption
notification dated 28th June 2017 (for short, 'the IGST Exemption
Notification') was issued by exercising the powers under the IGST Act.
Identical Exemption Notification was also issued on the same date (for
short, 'the GST Exemption Notification') under the Central Goods and
Services Tax Act, 2017 (for short, 'the GST Act').
4. Some of the HGOs and PTOs filed petitions in this Court to
challenge the levy of service tax on the service regarding the Haj
pilgrimage. By the order dated 11th December 2019 passed in Writ Petition
(C) No.977 of 2014, this Court directed the petitioners to make a
representation to the Government of India for grant of exemption from
service tax. Accordingly, a detailed representation was made by some
of the petitioners on 19th December 2019. The GST Council by the order
dated 14th March 2020, rejected the representation on the basis of the
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recommendation of the Fitment Committee. The said decision was
communicated by the Government of India by a letter dated 5th May
2020.
5. Most of the writ petitions in the current batch of petitions have
been filed by various organisations representing HGOs/PTOs. Only one
petition, i.e. Writ Petition (C) No.1329 of 2020, has been filed by an
individual petitioner who desires to undertake the Haj pilgrimage. Most
of the petitions challenge the aforesaid orders rejecting representations.
In some of the petitions, a declaration has been claimed that the provisions
of the laws relating to service tax are not applicable to services rendered
by HGOs and PTOs to Hajis for performing the religious activity of Haj/
Umrah. In some of the petitions, there is a challenge to the validity of
Rules 8 and 14 of the 2012 Rules. However, submissions have not been
canvassed on the issue of validity.
6. Counter Affidavits have been filed in Writ Petition (C) Nos.755,
856 and 896 of 2020, which have been treated as common affidavits in
this group of petitions.
7. At this stage, we may note here that in this batch of petitions,
we are not dealing with the issue of extra-territorial operation of the
service tax regime, as the said issue is pending for adjudication before
another Bench.
SUBMISSIONS OF THE PETITIONER
8. Shri Arvind P. Datar, the learned senior counsel, has made
detailed submissions in support of the writ petitions. His first submission
is based on the Mega Exemption Notification. He pointed out that
paragraph 5(b) of the said notification grants exemption to the services
provided by persons by way of conduct of any religious ceremony.
Secondly, he pointed out that under paragraph 5A, an exemption has
been granted to the services rendered by specified organisations in
respect of a religious pilgrimage, facilitated by the Ministry of External
Affairs of the Government of India under bilateral arrangement. He
pointed out that paragraphs 14 and 63 of the IGST Exemption Notification
use similar language. He also pointed out that two pilgrimages covered
under the existing bilateral arrangements are Kailash Manasarovar Yatra
and the Haj Pilgrimage. He also pointed out the definitions of specified
organisations in both the notifications, which in relation to Haj pilgrimage
means the Committee or State Committees as defined under Section 2
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of the 2002 Act. He pointed out that service tax is an indirect tax, the
burden of which is ultimately borne by the Haj pilgrims. He also pointed
out that the said Act of 2002 defines a 'pilgrim'. It means a muslim
proceeding to, or returning from, Haj. He also pointed out the details of
the journey undertaken by a Haj pilgrim right from his arrival in Mecca
and the duties of Haj pilgrims. He submitted that under paragraph 5(b)
of the Exemption Notifications, service by persons by way of conduct of
any religious ceremony is exempted. He pointed out that there is no
dispute that the religious ceremony in paragraph 5(b) will include the
Haj ceremony. He submitted that a wrong interpretation is sought to be
given to paragraph 5(b) by the Revenue by contending that it applies
only to the service provider who himself performs the religious ceremony
and, therefore, the exemption will not apply to HGOs/PTOs, as they
themselves do not perform Haj ceremony. He submitted that the burden
of service tax passes on to Haj pilgrims; therefore, the object of granting
exemption under the service tax or IGST is to reduce the financial burden
on the Haj pilgrims.
9. The learned senior counsel pointed out that earlier, the object
of helping poor Muslims to perform the Haj ceremony was sought to be
achieved by granting Haj subsidy. However, this Court, in the case of
Union of India & Ors. v. Rafique Shiekh Bhikan and Anr.1 held that
grant of such a subsidy is contrary to the tenets of Islam as the tenets of
Islam require the Haj pilgrims to perform the Haj ceremony with their
own funds after discharging their debts and after making a provision for
the benefit of their families. The learned senior counsel also relied upon
a decision of this Court dated 4th February 2019 in Writ Petition (C)
No.4 of 2019 (Federation Haj PTOs of India v. Union of India). He
pointed out that the role played by the HGOs and PTOs is unique, which
is recognized in both the above decisions. He pointed out that the said
decisions note that HGOs/PTOs act as tour operators for pilgrims, provide
a complete package right from the start of the journey from various
places in India to Saudi Arabia, their arrangements for stay in Saudi
Arabia, the performance of Haj Ceremony and safe return to India. He
pointed out that the majority of Haj pilgrims are taken care of by the Haj
Committee, and only a limited number of pilgrims can undertake Haj
pilgrimage through HGOs/PTOs. He pointed out that the cost of the
package provided by HGOs/PTOs consists of airfare from India to Saudi
Arabia. He also pointed out the importance of the Haj and the details of
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the pilgrimage. He pointed out that the pilgrimage performed after Ramzan
is called Haj, and the pilgrimage performed at different times is called
Umrah. Relying upon the decision of this Court in the case of Rafique
Shiekh Bhikan1, he pointed out that the five-day program of the Haj
ceremony is extremely a rigid procedure which is to be scrupulously
followed in a rigid manner and as per a time-bound schedule. He pointed
out that the pilgrim loses Haj if the strict procedure and time schedule
are not followed.
10. The learned senior counsel pointed out that many persons/
agencies are involved in the Haj religious ceremony, such as the Ministry
of Haj Affairs of the Kingdom of Saudi Arabia, the Ministry of Minority
Affairs of the Government of India, Tawafa Establishments, Maollims,
approved HGOs and lastly Haj pilgrims themselves. He would, therefore,
submit that the service by a person by way of religious ceremony
mentioned in the Exemption Notification has to be properly interpreted
to mean that the word 'person' will also include persons enumerated
above, including Haj pilgrims. He pointed out that all Haj pilgrims are
required to register themselves with Tawafa Establishments. He pointed
out that HGOs arrange for the aeroplane booking and money exchanges
on which service tax/ GST is duly paid. Though HGOs arrange for the
stay of Haj pilgrims in Saudi Arabia, as soon as they land in Saudi Arabia,
their entire movement is controlled by Tawafa Establishments. Maollims,
who are the agents of the Tawafa Establishments, control their movement.
He submitted that the Exemption Notification would apply for the conduct
of the Haj ceremony except for air travel and foreign exchange services.
His submission is that the residual amount is a consideration for the
services for conduct of the Haj ceremony and therefore, the said amount
is exempted from payment of service tax / IGST. That is how, under
paragraph 5(b) of the Mega Exemption Notification and corresponding
paragraph 14A of the IGST Exemption Notification, the HGOs are entitled
to exemption on the aforesaid residual amount.
11. He submitted that the beneficial object of the Exemption
Notification must be given full effect. He submitted that beneficial
exemptions differ from exemptions generally granted in tax statutes. On
this aspect, he relied upon this Court's decision in the case of
Government of Kerala & Anr. v. Mother Superior Adoration
Convent2.
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12. His next limb of argument is based on a violation of Article 14
of the Constitution of India. He pointed out that under paragraph 5A of
the Mega Exemption Notification and paragraph 63 of IGST Exemption
Notification, the services rendered by specified organisations such as
Haj Committees for Haj pilgrimage are wholly exempted.