Supreme Court on GST on Haj Tour Packages: Services by Haj Group Organisers Taxable [2022 INSC 749]

GST on Haj tour packages – Supreme Court ruling explained with headnote, key holdings, important paragraphs and FAQs.

A three-Judge Bench of the Supreme Court held that services rendered by Haj Group Organisers (HGOs) and Private Tour Operators (PTOs) to Haj pilgrims from India are taxable, both under the negative-list service tax regime from 1 July 2012 and under the IGST and CGST Acts from 1 July 2017. Because the HGO is located in India and the pilgrim's location is his usual place of residence in India, the place of provision or supply is in the taxable territory. The exemption for services "by way of conduct of any religious ceremony" does not cover HGOs, who only facilitate the pilgrimage. The exemption for religious pilgrimages under bilateral arrangement is confined to "specified organisations" such as the Haj Committees, and this classification does not violate Article 14 because Haj Committees are statutory, government-controlled, non-profit bodies. The issue of extra-territorial operation of the tax was left open, and the writ petitions were dismissed (paras 39–43, 51–55, 60, 65–67).

Headnote

Goods and Services Tax / Service Tax — Place of supply — Haj and Umrah tour packages by Haj Group Organisers — Religious ceremony exemption — Article 14 challenge to exemption for Haj Committees — Finance Act, 1994, Ss. 66B, 66C; Place of Provision of Services Rules, 2012, Rr. 2(h), 2(i), 3, 4, 6, 8, 9; IGST Act, 2017, Ss. 2(14), 5(1), 12, 13; CGST Act, 2017, S. 9(1); Mega Exemption Notification No. 25/2012-ST, paras 5(b), 5A; Notification No. 12/2017-CTR and No. 9/2017-ITR; Haj Committee Act, 2002

Associations of HGOs/PTOs and one prospective pilgrim challenged the levy of service tax and GST on Haj/Umrah packages and the GST Council's rejection (14.03.2020, on Fitment Committee recommendation) of their representation for exemption — Held, (i) the HGO's location is its registered premises in India and the pilgrim's location is his usual place of residence in India, so under Rules 3 and 8 of the 2012 Rules the place of provision is in the taxable territory; Rule 4(b) (performance-based services) and Rule 6 (events) do not apply; the same result follows under the pari materia provisions of the IGST and CGST Acts; (ii) paragraph 5(b) exempts services by a person by way of conduct of a religious ceremony; HGOs conduct no ceremony and merely facilitate pilgrims, and there being no ambiguity, the beneficial-exemption test of Mother Superior Adoration Convent does not apply; a composite package cannot be split to claim exemption for part; (iii) paragraph 5A applies only to specified organisations; Haj Committees are statutory bodies under the 2002 Act, under government control, without profit motive, and form a separate class with a rational nexus to the exemption's object, so there is no violation of Article 14; extra-territorial operation left open; writ petitions dismissed.

(Paras 1, 4, 39–45, 51–55, 57–60, 62, 64–67)

Judgment Intelligence

Key Holdings

• An HGO's location under Rule 2(h) of the 2012 Rules is its registered premises in India, and the Haj pilgrim's location under Rule 2(i)(b)(iv) is his usual place of residence in India; under Rules 3 and 8 the place of provision is therefore in the taxable territory (para 39).
• HGOs do not render performance-based services, so Rule 4(b) does not apply; Haj pilgrimage is not an "event" under Rule 6, as "similar events" must be read ejusdem generis and do not cover religious ceremonies (paras 40–41).
• From 1 July 2017 the position is unchanged under the IGST and CGST Acts, whose location-of-recipient provisions are pari materia with the 2012 Rules; services by HGOs to pilgrims located in India are taxable (para 55).
• Paragraph 5(b) of the Mega Exemption Notification exempts only services by way of conduct of a religious ceremony; HGOs conduct no religious ceremony, and there is no ambiguity warranting a liberal construction (paras 51–53).
• A composite Haj package charged as a whole cannot be dissected to claim exemption for the part said to relate to the ceremony or to services outside India (para 54).
• Haj Committees are statutory, government-controlled bodies without profit motive whose receipts go to a statutory fund; they form a class by themselves, and confining the paragraph 5A exemption to specified organisations does not violate Article 14 (paras 58, 60, 65).
• In tax exemptions latitude must be given to decision making; the Court exercised judicial self-restraint, and left open the issue of extra-territorial operation of the service tax regime (paras 64, 66).

Brief Facts

Haj pilgrimage from India can be undertaken only through the Haj Committee of India or HGOs under a bilateral arrangement with the Kingdom of Saudi Arabia; normally only about 30% of India's quota goes to HGOs (paras 2, 37). Under the negative-list regime from 1 July 2012, the Mega Exemption Notification No. 25/2012-ST exempted services by way of conduct of any religious ceremony (para 5(b)) and services by specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs under bilateral arrangement (para 5A). "Specified organisations" were Kumaon Mandal Vikas Nigam Limited and the Haj Committees under the Haj Committee Act, 2002. Identical exemption notifications were issued under the IGST and CGST Acts on 28 June 2017 (para 3).

On this Court's order of 11 December 2019 in W.P. (C) No. 977 of 2014, some HGOs represented for exemption; the GST Council rejected the representation on 14 March 2020 on the recommendation of the Fitment Committee, and the Government of India communicated this on 5 May 2020 (para 4). The writ petitions, mostly by HGO/PTO associations and one by a prospective pilgrim, challenged that rejection, sought a declaration that service tax laws did not apply to HGO services to Hajis, and in some cases challenged Rules 8 and 14 of the 2012 Rules, though validity was not argued (para 5). By agreement, the extra-territorial operation of service tax was not examined as it was pending before another Bench (paras 7, 24).

Issue (para 1)

1. Are services provided by HGOs/PTOs to Haj pilgrims provided in the taxable territory, making them liable to service tax from 1 July 2012 and to tax under the IGST and CGST Acts from 1 July 2017?
2. Are such services exempt under paragraph 5(b) of the Mega Exemption Notification (and the corresponding GST/IGST entries) as services by way of conduct of a religious ceremony?
3. Does confining the exemption under paragraph 5A to specified organisations such as the Haj Committees, and denying it to HGOs, violate Article 14?

Court's Findings

Place of provision is in India: HGOs must register under the Service Tax Rules, so their location under Rule 2(h)(a) is their registered premises in India. The pilgrim is unregistered and falls in the fourth category of Rule 2(i)(b), namely his usual place of residence, which is in India. It is "not the place where the service recipient receives service". Under Rules 3 and 8 the place of provision is the location of the recipient in the taxable territory (paras 39, 43). Rule 4(b) applies to performance-based services, which HGOs do not render. Rule 6 does not cover religious ceremonies (paras 40–41). Even if the service were transportation, Rule 9 and Section 12 of the IGST Act would point to the provider's location or the place of embarkation (para 42). CESTAT and other decisions cited by the petitioners related to the pre-July 2012 regime and did not apply (para 45).

Position under IGST and CGST Acts: From 1 July 2017, tax is payable on supplies under the IGST and CGST Acts. Section 2(14) of the IGST Act is pari materia with the 2012 Rules, and the pilgrim's location is his usual place of residence. The Court held there is "no material change" brought about by the GST and IGST Acts for HGO services, so services supplied to recipients located in India are taxable (para 55).

Religious ceremony exemption not available: Paragraph 5(b) refers to the service provider rendering service by way of conduct of a religious ceremony; it does not exempt service enabling the recipient to perform a ceremony. The same notification distinguishes "religious ceremony" in para 5(b) from "religious pilgrimage" in para 5A. Like a priest performing a puja, the exemption covers one who conducts the ceremony; HGOs only facilitate pilgrims to reach the destination. With no ambiguity, the beneficial-exemption rule in Mother Superior Adoration Convent had no occasion to apply (paras 51–52). The word "person" refers to the service provider, not to pilgrims or Saudi entities (para 53). HGOs sell a single package for one charge, which cannot be split to exempt parts (para 54).

No discrimination under Article 14: The fact that HGOs and Haj Committees serve the same pilgrims does not by itself establish discrimination; the comparison is between the taxable persons (para 57). Haj Committees are bodies corporate under the 2002 Act with statutory welfare duties under Section 9, government power to reconstitute them and approve budgets, and receipts going into the Central Haj Fund usable only for statutory purposes. They have a "complete absence of profit motive", whereas HGOs earn profit and carry no comparable duties (para 58). Rafique Sheikh Bhikan did not help the HGOs, since para 10 of that decision notes substantial PTO profits (para 59). The classification has an intelligible differentia and a nexus with the object of promoting non-profit pilgrimage services by government-controlled bodies (para 60). The Fitment Committee's reasons were based on relevant factors (para 62), and following M. Jhangir Bhatusha and R.K. Garg, the Court gave latitude to tax policy (paras 63–64).

Final Outcome / Directions (paras 66–67)

• The challenge in the writ petitions was held to have no merit (para 66).
• The issue of extra-territorial operation of the service tax regime was not decided and is kept open for appropriate proceedings, as requested by the parties (paras 44, 66).
• The writ petitions were dismissed with no order as to costs (para 67).

Legal Principle

For an unregistered individual recipient, the "location of the service receiver" under Rule 2(i)(b)(iv) of the Place of Provision of Services Rules, 2012, and the corresponding definition in Section 2(14) of the IGST Act, is his usual place of residence, not where the service is consumed. A tour package sold in India by an Indian operator to an Indian resident is therefore provided in the taxable territory even if performed abroad, subject to the open question of extra-territoriality. An exemption for services "by way of conduct of any religious ceremony" covers only one who conducts the ceremony, not one who facilitates the journey, and an unambiguous exemption is not liberally construed merely because it is beneficial. Exemptions confined to statutory, government-controlled, non-profit bodies rest on a reasonable classification under Article 14, and courts show judicial restraint in tax-exemption policy (paras 39, 43, 51–52, 55, 60, 64).

Precedents Relied Upon

• Commissioner of Customs (Import), Mumbai v. Dilip Kumar and Company, 2018 (9) SCC 1 – Referred to · Discussed at para 48: exemption notifications are interpreted strictly and ambiguity is resolved in favour of the Revenue.
• Government of Kerala v. Mother Superior Adoration Convent, 2021 (5) SCC 602 – Distinguished · Discussed at paras 49, 52: beneficial exemptions are construed liberally, but there was no ambiguity in para 5(b) to attract this test.
• Union of India v. Rafique Shiekh Bhikan, 2012 (6) SCC 265 – Distinguished · Discussed at para 59: the observation that PTO profit is incidental was made in the context of registration conditions; para 10 notes substantial PTO profits.
• All-India Federation of Tax Practitioners v. Union of India, 2007 (7) SCC 527 – Distinguished · Discussed at para 45: related to the period before the negative-list regime of 1 July 2012.
• S.K. Dutta, Income Tax Officer v. Lawrence Singh Ingty, 1968 (2) SCR 165 – Distinguished · Discussed at para 61: classification on an imaginary distinction was struck down there; on facts it did not help the petitioners.
• M. Jhangir Bhatusha v. Union of India, 1989 Suppl. (2) SCC 201 – Relied upon · Discussed at para 63: differential customs duty for the State Trading Corporation and private importers was upheld on policy grounds.
• R.K. Garg v. Union of India, 1981 (4) SCC 675 – Relied upon · Discussed at para 64: economic and tax laws are viewed with greater latitude, warranting judicial self-restraint.

Important Paragraphs of the Judgment

Para 39: "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."

Para 51: "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 52: "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."

Para 54: "Only a part of the package cannot be picked up for invoking exemption. A particular service rendered cannot be divided into parts."

Para 64: "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."

What the Ruling Means: Practical Impact

• Haj and Umrah packages taxable: HGOs and PTOs registered in India supplying tour packages to Indian residents are liable to GST (and service tax for the earlier period), as the place of supply is the pilgrim's residence in India (paras 39, 55).
• Religious ceremony exemption is narrow: The entry covers those who actually conduct ceremonies, such as priests, not tour operators, hotels or transporters who enable devotees to attend (paras 51–53).
• No splitting of composite packages: A package charged as a single price cannot be broken up to claim exemption for components said to be consumed abroad or linked to the ceremony (para 54).
• Extra-territoriality still open: The Court expressly did not decide whether taxing services performed outside India is extra-territorial; that argument remains available in appropriate proceedings (paras 44, 66).

Frequently Asked Questions

Is GST payable on Haj packages sold by private tour operators?

Yes. The Court held that with the HGO in India and the pilgrim's usual residence in India, the place of supply under the IGST and CGST Acts is in India, and there is no material change from the service tax position (para 55).

Why does the religious ceremony exemption not apply to HGOs?

It exempts services by a person by way of conduct of a religious ceremony. HGOs arrange flights, stay, food, transport and foreign exchange; the ceremonies are performed by pilgrims or others in Saudi Arabia, not by HGOs (paras 51–53).

Why are Haj Committees exempt but not HGOs?

Paragraph 5A exempts specified organisations. Haj Committees are statutory bodies with welfare duties, under government control, and without profit motive, with receipts going into a statutory fund. They form a separate class, so the distinction is valid under Article 14 (paras 58, 60, 65).

Does the service being performed in Saudi Arabia make it non-taxable?

Not under the place-of-provision rules: the recipient's location is his usual residence, not where he receives the service. Whether taxing such services is extra-territorial was not decided and was left open (paras 39, 44, 66).

Did the Court consider the Article 25 challenge?

The Court noted that the Article 25 ground was taken in one petition without any attempt to substantiate it (para 44).

Judgment Copy

Judgment PDF: 2022 INSC 749 – All India Haj Umrah Tour Organizer Association v. Union of India (official copy, sci.gov.in)

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