Can Haj & Umrah Services Be Exempted From GST? Supreme Court Starts Hearing Tour Operators' Plea

Mr. Harshavardhan sought to indicate the response of the Centre on an RTI application, where, he insisted, the UOI admits that Haj and Umrah privileges are part of religious ceremony.

Justice Khanwilkar: "In all writ petitions, RTI is relied on. This is always misleading. Depending on what question is posed, based on that the answer is given. That has been our broad experience till now. RTI is not an admission of the government. The concerned authority which is required to do business of taxation should depose on affidavit that this is what we state and only then can we accept it as admission"

The advocate then took the bench through the 'Haj guide'- "Everything is indicated. It says 'stay overnight in Mina'. It is part of the ceremony, that I have to stay is also indicated. The second day description is also given..."

Justice Khanwilkar: "If you are right on the first point that all this is happening outside of India and therefore this regime is not applicable, then all this is not required to be elaborated. What you are being charged in India is in respect of what service is offered from India and culminating in India- This is what the question is and this is what the department is looking at. We have to establish that even if it is happening outside India, the originating place is this and the culminating destination is also in India, and therefore it is all chargeable here in India. Going there is itself a process, starting from here, originating from here"

Mr. Harshavardhan: "Today, the challenge is not to the booking of airline tickets or taxation on that. It is also not for the money changing services. There also the taxes are being paid. The limited challenge is restricted to the services provided in Saudi Arabia. If your lordships say it is a taxable service, then I am relying on exemption"

Justice Khanwilkar: "then we have to say that no doubt it is services and facilities, but it is all religious ceremony, all that is happening outside India. And once that is said, then Exemption notification applies..."

Justice Khanwilkar: "You say anything done outside India is outside the scope of this taxation dispensation. Once that argument is accepted, the rest need not be gone into. If it is not accepted, then the second point is that you make adjustments on that. That adjustment argument cannot be opposed by the other side until they point out some specific provision as to why adjustment cannot be given. The other side says because services are organised from here, charges will be leviable here. That is their plea. We have to draw that line. Services may have been organised from here but ultimately some activities are done outside of India for which payment is made there at the local level- that cannot be taxable here in India. That is your point. But which activities out of India for which you have to pay? If it is outside of India, then the whole thing is not covered under this Act because this law cannot travel beyond the boundaries"

Justice Khanwilkar: "Airline tickets and money changing is there. What remains of that bill is the actual spending done there for making arrangements by you and the actual amount spent by the parties there. Those matters are outside India's territory. That is how the line will have to be drawn by the authority concerned"

ASG: "On the aspect of extraterritoriality, we argued for one month before Court 4. There are 12 issues. One of the issues is on extraterritoriality. The judgment is reserved. That is also a three-judge bench"

ASG: "If they are going to say everything is extraterritorial, then 60% of our tax economy will go for a toss...We have abandoned the performance-based rule. Earlier, the law was that when something is performed partly in India and partly outside India, it is deemed to have been performed outside India. Now, it is reverse...the point in that matter before the other bench is the same"

Justice Khanwilkar: "The best course is to await the decision"

Mr. Datar: "We may say that Kailash Mansarovar is exempt. Why don't they exempt us? It is a religious ceremony. They say it is a commercial activity"

Justice Khanwilkar: "Then restrict your argument to religious ceremony. His (Mr. Harshavardhan's) first point was extraterritorial. If you are just on religious ceremony...('Then we can come under exemption', added Mr. Datar)...If you are confining to religious ceremony, then we will immediately address. Extraterritorial will have to wait that judgment because that is also three-judge combination".

The bench will continue hearing on April 26.