The Supreme Court on Tuesday held that Haj Group Organisers (HGOs) and private tour operators are liable to pay service tax on the service rendered by them to Haj pilgrims.
A three-judge Bench of Justices A.M. Khanwilkar, Abhay S. Oka and C.T. Ravikumar distinguished HGOs and private tour operators from the statutory Haj Committees, saying the former render service for profit while the latter is an agency or instrumentality of the State which works for the welfare and benefit of the pilgrims.
Justice Oka, who authored the 78-page judgment, held there was no discrimination in exempting Haj Committees from paying service tax while giving no such relief to HGOs and tour operators.
The court said Paragraph 5A of the 'Mega Exemption Notification' issued in 2012 clearly specified Haj Committees as one of the two organisations eligible for service tax exemption with respect to religious pilgrimages facilitated by a bilateral agreement entered into by the Ministry of External Affairs.
"HGOs are not the specified organisations. 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," Justice Oka reasoned.
Justice Oka added that service tax exemption under sub-clause (b) of clause 5 was applicable only 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 service rendered by way of conduct of any religious ceremony.
"The service rendered by HGOs to Haj pilgrims is to facilitate them to reach 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," Justice Oka explained.
HGOs have no role to play in the actual conduct of religious ceremonies which are a part of the Haj pilgrimage. The service rendered by HGOs is by way of providing air bookings, arranging for the stay of Haj pilgrims in Saudi Arabia, etc.
Besides, the recipients of the HGOs service are located in India, and hence the service is taxable.
The judgment came on petitions filed by HGOs and private tour operators challenging the levy of service tax on the service regarding the Haj pilgrimage.
The GST Council had rejected their representation in March 2020.
HGOs are allocated 30% of the quota of the number of pilgrims assigned by the Kingdom of Saudi Arabia to India as per the bilateral agreement.
