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

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, you pay the tour operator, there is no exemption. But the point is that even if you go to any other place of worship, the actual money paid for the puja or the worship is exempt. 'Conduct of religious ceremony' is the entire process. Haj is a complicated ceremony going into five days"

Justice Khanwilkar: "Which religious ceremony is simple? Every one of them is complicated"

Mr. Datar: (in a lighter vein) "Justice Ravi Kumar would agree that weddings in Kerala are. They get over in about 5 minutes"

Justice Khanwilkar: "The preparatory work would be long"

Continuing, Mr. Datar submitted, reading from the written submissions: "The nature of Haj is such, it is not like Varanasi, Tirupati or Vatican City. The five day programme of the Haj ceremony is an extremely rigid procedure, every moment is specified in the Quran and has to be scrupulously followed. The Haj ceremony is controlled by the Kingdom of Saudi Arabia and all devout Muslims who perform Haj have to register with the Tawafa establishment. The Haj Group Organiser arranges the plane booking and GST is paid on the same. Performance of Haj is a sacred religious ceremony and of fundamental importance to the practice of Islam and it would be inappropriate to term it as a commercial activity"

Justice Khanwilkar: "Why have you taken this position that 'it would be incorrect to say that going to Haj is akin to Varanasi, Tirupati and Vatican City'? Without going into it, you can argue"

Mr. Datar: "There is no obligation on me as Hindu that I must go to Badrinath, Varanasi etc. Also, on the actual Seva and Laddu Prasad in Tirupati, there is no GST. Only on accommodation, there is GST"

ASG N. Venkataraman: "Let us not go into this. The Kashi yatra may be fundamental, that one spends four days in Allahabad and one day in Kashi"

Justice Khanwilkar: "Let us not get into this debate. Being rationalist is also part of Hindu religion"

Mr. Datar: "They say HGOs are not conducting religious ceremony but acting as a commercial entity engaged in organising for those who wish to journey to Saudi Arabia. Haj is in a different nature of ceremony as shown in the book of Quran and as recognised by your lordships. That is why I gave that example of Varanasi etc"

Indicating the Haj guide, he advanced, "It is an Elaborate ceremony. There detailed instructions as to what steps to perform on the First day of Haj, second day of Haj, third day of Haj, fourth day of Haj and the fifth day of Haj. The Supreme Court has said this is so elaborate that if you slip even one thing, then you will not be called a 'Haji'. People have been known to spend their life savings but by missing one step, they have lost out on the chance of being called 'Haji' and having completed the Haj. I am only submitting this is a very elaborate religious ceremony, which is an obligation on every Muslim to perform. Going to Haj is one of the five pillars of Islam"

Then he drew the attention of the bench to the description of Haj on Wikipedia- "The Hajj is an annual Islamic pilgrimage to Mecca, Saudi Arabia, the holiest city for Muslims. Hajj is a mandatory religious duty for Muslims that must be carried out at least once in their lifetime by all adult Muslims who are physically and financially capable of undertaking the journey, and of supporting their family during their absence from home.

In Islamic terminology, Hajj is a pilgrimage made to the Kaaba, the "House of God", in the sacred city of Mecca in Saudi Arabia. It is one of the Five Pillars of Islam, alongside Shahadah (oath to God), Salat (prayer), Zakat (almsgiving) and Sawm (fasting of Ramadan). The Hajj is a demonstration of the solidarity of the Muslim people, and their submission to God (Allah). The word Hajj means "to attend a journey", which connotes both the outward act of a journey and the inward act of intentions.

The rites of pilgrimage are performed over five to six days, extending from the 8th to the 12th or 13th of Dhu al-Hijjah, the last month of the Islamic calendar"

Justice Khanwilkar: "When you reach at that destination and perform these five-day rituals, the 'conduct of the religious ceremony' will have to be understood as that. But to reach there cannot be termed as conduct of religious ceremony just because you are travelling from India to that place. That is not conduct. That is facilitating you to conduct or undertake that religious ceremony. Whether the exemption applies to all activities from the time you start here and till you come back to this place? The answer is 'no'. It applies only to the conduct of any religious ceremony. It is very specific to ceremony, Not everything that is religious"

Mr. Datar: "I pay a general amount of 1,50,000-1,80,000 for the Haj pilgrimage. It includes air fare of the to-and-fro trip and hotel accommodation may also be there. Air fare, money change service is subject to service tax. The moment I land in Saudi Arabia, I am handed over to the Tawaffa and to specific agents. I have to wear the white robe which is the 'Ihram'"

Justice Khanwilkar: "the moment you are there and surrender yourself to those people, that is when the religious ceremony starts?"

Mr. Datar: "Like in Sabarimala, you may start your ceremony from a local temple in your town. Here also, some of the people wear that white dress here in India only. I have seen people wearing it hear only"

Justice C. T. Ravikumar: "It lasts for six days. First day, it starts with putting on the 'Ihram'. That is when the religious activity commences?"

Mr. Datar: "I am not sure as to when it starts. But my submission is that once you minus the air fare and the money change, whatever amount remains has to be towards the religious ceremony. Please take a holistic view of the situation, where a group of religious people undertake the pilgrimage and it is so sacred to them that everybody must perform. Your Lordships would be surprised to know that our Supreme Court has said that the Haj subsidy is contrary to Quran because you have to go on your own money, you have to make sure your loans are repaid and you have provided for your relatives because you may not come back, back in those days. All those things are quoted by the Supreme Court. When we take a holistic view, I am not saying give me an entire exemption from one lakh 50 or one lakh 80. I am only saying the religious component which I have paid to the Tawafa, that has to be exempt. The purpose of service tax is mostly on a commercial activity"

Justice Khanwilkar: "That is very loosely put that service tax is only on commercial activity"

Bench: "You are only facilitating the persons to reach there and then providing some facilities. What is your role in the conduct of the religious ceremony so as to claim that exemption?"

Mr. Datar: "Suppose I am going to Haj. Now there are three players here. One can go through the Haj committee. India has a quota, 70% is given to the Haj committee, 30% outside the Haj committee. There is the lottery system, lucky draw is there for the Haj Committee. If I am not lucky, I come to the HGO. HGO is slightly more expensive than the Haj committee. Haj committee does not provide Food, catering and accommodation is generally far away from the place. With HGO, you will usually get boarding, lodging and food"

Bench: "The word relevant is 'service by a person by way of conduct of religious ceremony'. How can say that you are doing service by way of conduct of religious ceremony?"

Mr. Datar: "Religious ceremonies are being conducted by the Kingdom of Saudi Arabia, by the persons concerned at Mecca. I am paying for that religious ceremony. Say, Two lawyers apply for Haj. One gets lucky and gets into Haj committee quota and he goes without paying GST. If I don't get into Haj committee, I have to pay 18% GST. This is an article 14 argument...if we take Tirupati Devasthanam, Tirupati will conduct all the Seva. Ultimately all the institutions conduct that particular ceremony. 'Person' includes juristic entity, body corporate. Here, the religious ceremony has to be performed by the 'Haji' himself- going there, walking seven times, drinking that water, throwing that stone and so on"

Justice Khanwilkar: (in lighter vein) "There is no such thing as a 'Yajamaan', where you can handover vakalatnamah and ask someone else to do it"

Bench: "There are three components of the service- You arrange for foreign exchange, air ticket and you also arrange for everything which happens after the person lands in Saudi Arabia. You are saying exemption will apply to the third part?"

Mr. Datar: "If you ask me, frankly, even the air fare should be exempt. If I have to go by Haj, I can only go by air. It is a bundled service. But they are agreeing to pay the tax on that so I am not coming in the way"

Justice Khanwilkar: "What is the answer to the people going in the 70% quota of the Haj committee and there being no tax on them?"

Mr. Datar: "They say there is a bilateral agreement between India and the Kingdom of Saudi Arabia where no service tax is levied. Only those covered by the bilateral agreement will be exempt"

Justice Khanwilkar: "for the 70% quota, air fare is also exempted, everything is exempted?"

Mr. Datar: "No, on Airfares they are paying"

Justice Khanwilkar: "What is the basis on which this distinction is made? If exemption is permissible for the 70%, bilateral agreement will not make that difference. Bilateral agreement is only to permit the 70% people to enter the city"

Mr. Datar: "It is their stand. Today, there is a situation that the 70% who in the lucky draw get the right, they may not pay service tax. The people who go to the HGO, they have to pay service tax. The rationale for this discrimination or the differentiation in the exemption granted to the Haj committee is that the Haj committee is through the government, and between the government and the Royal Kingdom of Saudi Arabia, there is a bilateral agreement so those who are going under that agreement will get the benefit"

Justice Khanwilkar: "Your argument should be why the exemption is made for the 70% quota going through the Haj committee. It is the same religious ceremony. Even this 30% for the HGO is under the quota under the bilateral agreement. So why this distinction?"

The discussion then veered to the difference between "pilgrimage" and "ceremony"

Justice Khanwilkar: "Lawmakers say pilgrimage is the whole process of commencing the journey and coming back. Ceremony is the actual performance of the steps for five days as you pointed out. Travelling up to Haj is pilgrimage. Pilgrimage is not ceremony. Pilgrimage is travelling"

Mr. Datar: "What the Supreme Court has said about the importance of Haj- they say Haj is such a fundamental tenet, that the Quran forbids you to take money from somebody else to go on Haj..."

Bench: "But Haj can be conducted for somebody else also?"

Another Advocate on the petitioners' side clarified that that can be done post the death of a person, like a son can undertake Haj for his father.

Mr. Datar then continued to quote the following from a 2012 decision of the Supreme Court- "The pilgrim is actually the person behind all this arrangement. For many of the pilgrims Haj is once in a lifetime pilgrimage and they undertake the pilgrimage by taking out the savings made over a lifetime, in many cases especially for this purpose. Haj consists of a number of parts and each one of them has to be performed in a rigid, tight and time-bound schedule. In case due to any mismanagement in the arrangements regarding the journey to Saudi Arabia or stay or travelling inside Saudi Arabia any of the parts is not performed or performed improperly then the pilgrim loses not only his life savings but more importantly he loses the Haj. It is not unknown that on landing in Saudi Arabia a pilgrim finds himself abandoned and completely stranded. It is, thus, clear that in making selection for the registration of PTOs the primary object and purpose of the exercise cannot be lost sight of. The object of registering PTOs is not to distribute the Haj seats to them for making business profits but to ensure that the pilgrim may be able to perform his religious duty without undergoing any difficulty, harassment or suffering. A reasonable profit to the PTO is only incidental to the main object"

Mr. Datar: "So you can't say because the HGO is making a profit, it is on a different footing. I spoke to people, from the time you land, you have to be absolutely together, you cannot even leave the group. Because if you miss even a single step..."

Justice Khanwilkar: "Without going into all these details, we will say Haj is a religious ceremony. The distinction is made between pilgrimage and ceremony. That is how the exemption notification clause is read"

Mr. Datar: "Pilgrimage is a genus of a larger concept. Ceremony is part of pilgrimage"

Justice Khanwilkar: "When that religious ceremony begins, only that part will be exempt under this notification..."

ASG: "The notification does not say 'in' or 'in relation to' a religious ceremony. That is why airfare etc is not exempt. So the person who performs the religious ceremony is exempt, not the facilitator. We cannot read 'in' or 'in relation to' in the notification. That will be rewriting the notification...the same position is applied to Kailash Mansarovar also- if you by the government route, you are exempt"

Mr. Datar: "In giving a strict interpretation to the notification, let us not lose sight of the whole objective of the notification. The idea is to give exemption to religious ceremony. Here, the ceremony is performed by five days. If it is a religious ceremony, we don't pay service tax because we want to exempt religious ceremonies of all kinds. Here, it does not make a distinction between Hindu, Muslim, Christian, Jain etc"

Justice Khanwilkar: "Yes, it is religion neutral. 'Religious ceremony' is religion neutral"

Mr. Datar: "Their (respondent's) counter-affidavit says that the Haj committee is controlled by the government of India, monitored by the government of India and its accounts are audited. I want to say that even we are subject to restrictions, we can also only deal with the Tawafa organisation"

Justice Khanwilkar: "pilgrimage and ceremony distinction we understand. But ultimately the destination being the same, If what I pay is charged, you will also be charged. If one is exempted, I will not be charged either. We are not able to understand the distinction"

Next Senior Advocate Gopal Sankaranarayanan, on the petitioners' side, addressed the issue of Article 14 as regards the exemption to the pilgrims under the Haj Committee quota as against those going under the HGO route- "This is entirely covered by the bilateral agreement. Whether you are a pilgrim who is being sponsored by the Haj committee or by the HGO, the entirety of it is under the bilateral agreement. When they are trying to say that look, Haj committee is under bilateral treaty, that is not correct. Everybody is under the bilateral treaty"

Justice Khanwilkar: "Bilateral is for hundred percent. The 70 and 30 is done locally"