Haj organisers don't conduct religious ceremony, can't be exempted from GST: SC

The Supreme Court on Tuesday dismissed a clutch of petitions filed by various private tour operators seeking Goods and Services Tax (GST) exemption for the Haj and Umrah tours offered by them.

A bench, headed by Justice A.M. Khanwilkar and comprising Justices Abhay S. Oka and C.T. Ravikumar said: "The service rendered by HGOs (Haj group organisers) 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 bench added that 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. "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", it noted, in a 78-page judgment.

The top court said the real question is whether HGOs are rendering service by way of conduct of any religious ceremony. "As held earlier, 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," it pointed out.

The petitions seeking exemption had alleged discrimination against the pilgrims travelling to Saudi Arabia. However, the top court dismissed the petitions on both the grounds of exemption and discrimination.

The bench said: "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."

It said petitioners' contention in connection with extra-territorial application of GST for services given outside India is kept open, as it is pending consideration before another bench.

The top court said 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 a 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," it said.

The tour operators moved the top court against the levy of GST on Hajis who avail themselves of services offered by registered private tour operators. The petitioners contended that services consumed outside India cannot be subjected to GST and it is discriminatory, exempting certain hajis who undertake the pilgrimage through the Haj Committee of India.