ABCDEFGH93else in the Kingdom of Saudi Arabia –Thus v. UNION OF INDIA ABCDEFGH951.5 The Exemption Notifications under the IGST and theGST

Accordingly, the Place of Provision of Services Rules, 2012 (for short,‘the 2012 Rules’) were framed which came into force with effect from1st July 2012. On 20th June 2012, Mega Exemption Notification no.25 of2012–ST (for short, ‘the Mega Exemption Notification’) was issuedcontaining several exemptions. Paragraph 5(b) of the Mega ExemptionNotification provided for the exemption on services by a person by wayof conduct of any religious ceremony. Paragraph 5A of the MegaExemption Notification provided for the exemption to services byspecified organisations in respect of a religious pilgrimage facilitated bythe Ministry of External Affairs of the Government of India, under bilateralarrangement. The Mega Exemption Notification defines specifiedorganisations as Kumaon Mandal Vikas Nigam Limited, a Governmentof Uttarakhand Undertaking and the Committee or State Committee asdefined in Section 2 of the Haj Committee Act, 2002 (for short, ‘the2002 Act’).

With effect from 1st July 2017, under the provisions of the Integrated Goods and Services Tax Act, 2017 (for short, ‘the IGST Act’),the same service tax regime was continued. Identical exemptionnotification dated 28th June 2017 (for short, ‘the IGST ExemptionNotification’) was issued by exercising the powers under the IGST Act. Identical Exemption Notification was also issued on the same date (forshort, ‘the GST Exemption Notification’) under the Central Goods and Services Tax Act, 2017 (for short, ‘the GST Act’).4. Some of the HGOs and PTOs filed petitions in this Court tochallenge the levy of service tax on the service regarding the Hajpilgrimage. By the order dated 11th December 2019 passed in Writ Petition(C) No.977 of 2014, this Court directed the petitioners to make arepresentation to the Government of India for grant of exemption fromservice tax. Accordingly, a detailed representation was made by someof the petitioners on 19th December 2019.

The GST Council by the orderdated 14th March 2020, rejected the representation on the basis of theALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH106SUPREME COURT REPORTS[2022] 17 S.C.R.recommendation of the Fitment Committee. The said decision wascommunicated by the Government of India by a letter dated 5th May2020.

He also pointed out that two pilgrimages coveredunder the existing bilateral arrangements are Kailash Manasarovar Yatraand the Haj Pilgrimage. He also pointed out the definitions of specifiedorganisations in both the notifications, which in relation to Haj pilgrimagemeans the Committee or State Committees as defined under Section 2 ABCDEFGH107of the 2002 Act. He pointed out that service tax is an indirect tax, theburden of which is ultimately borne by the Haj pilgrims. He also pointedout that the said Act of 2002 defines a ‘pilgrim’. It means a muslimproceeding to, or returning from, Haj. He also pointed out the details ofthe journey undertaken by a Haj pilgrim right from his arrival in Meccaand the duties of Haj pilgrims. He submitted that under paragraph 5(b)of the Exemption Notifications, service by persons by way of conduct ofany religious ceremony is exempted. He pointed out that there is nodispute that the religious ceremony in paragraph 5(b) will include the Haj ceremony.

He submitted that a wrong interpretation is sought to begiven to paragraph 5(b) by the Revenue by contending that it appliesonly to the service provider who himself performs the religious ceremonyand, therefore, the exemption will not apply to HGOs/PTOs, as theythemselves do not perform Haj ceremony. He submitted that the burdenof service tax passes on to Haj pilgrims; therefore, the object of grantingexemption under the service tax or IGST is to reduce the financial burdenon the Haj pilgrims.

In rejoinder, Shri Arvind P. Datar, Senior Advocate submittedthat in the present case, Rule 8 will have no application at all. The learnedsenior counsel submitted that the test of purposive interpretation laiddown by this Court in the case of Government of Kerala & Anr. v.Mother Superior Adoration Convent2 will have to be applied. Whileinterpreting the exemption provision, he submitted that the decisions reliedupon by the Revenue in the case of M. Jhangir Bhatusha & Ors.13,will not apply to the facts of the case. He pointed out that this was acase where this Court upheld different treatment given to the State TradingCorporation and private importers. He submitted that the differentialexemptions were granted after the Government was satisfied that itwas necessary in the public interest to pass a special exemption orderconsidering the exceptional circumstances set out therein.CONSIDERATION OF SUBMISSIONS33.

The service tax was introduced by way of the Finance Act. The Finance Act incorporated various services which were made subjectto payment of service tax. The services were enumerated in clause 105of Section 65 of the Finance Act.34. Service tax is an indirect tax which is leviable on the serviceprovider who is the taxable person. The service tax is a tax on servicerendered. It is not a direct tax on service provider but a value-added taxon the activity by way of service. The service provider can pass on theburden of payment of service tax to the service recipient. In this groupof petitions, we are concerned with the negative service tax regime, which was introduced with effect from 1st of July 2012 by incorporationof Sections 66B and 66C by the Finance Act, 2012. When this regimewas introduced with effect from 1st July 2012, more than 100 specificservices were incorporated in Clause 105 of Section 65 of the FinanceAct.

Section 66B introduced a negative service tax regime by providing ABCDEFGH117that tax shall be levied on the value of all services other than thosespecified in the negative list. Section 66B is the charging Section. Forthe sake of convenience, we are reproducing Section 66B which readsthus:

SECTION 66B. Charge of service tax on and afterFinance Act, 2012.— There shall be levied a tax (hereinafterreferred to as the service tax) at the rate of fourteen percenton the value of all services, other than those servicesspecified in the negative list, provided or agreed to beprovided in the taxable territory by one person to anotherand collected in such manner as may be prescribed.

(emphasis added)35. Thus, the service tax is payable on all services other thanthose specified in the negative list provided or agreed to be provided inthe taxable territory by one person to another. The taxable territory isdefined in Clause 52 of Section 65B of the Finance Act to mean theterritory to which the provisions of the relevant Chapter ‘SERVICETAX – STATUTORY PROVISIONS’ containing Sections 64 to 114 ofthe Finance Act apply.

Sub-section (1) of Section 64 of the Finance Actprovides that the relevant Chapter extends to the whole of India exceptthe State of Jammu and Kashmir. Under the negative list regime whichoperated till 30th June, 2017, service tax was payable on services providedor agreed to be provided in the taxable territory which is the whole of India except Jammu and Kashmir. Section 66C confers rule-makingpower on the Central Government for determination of the place wheresuch services are provided or deemed to have been provided or agreedto be provided or deemed to have been agreed to be provided. Byexercising the power under Section 66C of the Finance Act, the 2012 Rules were enacted and were brought into force with effect from 1stJuly 2012.36. In these petitions, we are concerned with HGOs or PTOs. Itis, therefore, necessary to understand the nature of services provided byHGOs/ PTOs. Haj pilgrimage is a five-day religious pilgrimage to Meccaand nearby Holy places in Saudi Arabia.

As per the Holy Quran, allMuslims who are physically and financially sound must perform the Hajpilgrimage at least once in their lives. As provided in Holy Quran, the Haj pilgrimage is one of the five pillars or duties of Islam. Haj takesplace only once a year in the twelfth and final month of Islamic lunarALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH118SUPREME COURT REPORTS[2022] 17 S.C.R.calendar. Pilgrimage undertaken to Mecca at other times is known as Umrah. During the five days of Haj, the pilgrims are required to performa series of rituals, the details of which are not relevant for deciding theissues involved in these petitions.37. To enable Haj pilgrims of India to undertake Haj pilgrimage, there is a bilateral agreement executed every year between the Kingdomof Saudi Arabia and the Government of India. As per the bilateralagreement, a quota of number of pilgrims is assigned to India.

Out of thesaid quota, normally only 30% is allocated to HGOs. The rest of thequota is made available to the Haj Committee.38. HGOs render services to Haj pilgrims by purchasing flighttickets, arranging and making payments for accommodation in SaudiArabia, arranging and making available food during their stay in SaudiArabia, arranging and making payments for transportation in Saudi Arabiaand providing foreign exchange in the form of Saudi Riyals. As stated inthe written submissions filed by Shri Arvind P. Datar, the learned seniorcounsel, all Muslim devotees who wish to undertake the Haj pilgrimagehave to register themselves with Tawafa establishment in Saudi Arabia. As soon as Haj pilgrims land in Kingdom of Saudi Arabia, their entiremovement is controlled by Tawafa establishment and its agents knownas Maollims. Similar kinds of services are provided by Haj Committee tothose pilgrims who undertake Haj pilgrimage through Haj Committee.

As pointed out by Shri Gopal Sankaranarayanan, the learned seniorcounsel, HGOs provide better accommodation at a place near Kabahand also arrange for food. However, the Haj Committee providesaccommodation at far away places without the facility of catering. The2012 Rules have a direct connection with liability to pay service tax asthe said Rules decide the place of provision of a service. Apart from thedefinitions of ‘location of the service provider’ and ‘location of the servicereceiver’ under Clauses (h) and (i) of Rule 2, Rules 3, 4, 7, 8 and Rule 9of the said Rules of 2012 are also relevant. Clauses (h) and (i) of Rule 2,Rules 3, 4, 7, 8 and Rule 9 read thus: “2(h)” location of the service provider” means- (a) wherethe service provider has obtained a single registration, whethercentralized or otherwise, the premises for which such registrationhas been obtained; (b) where the service provider is not covered under sub-clause(a): ABCDEFGH119(i) the location of his business establishment; or(ii) where the services are provided from a place other than thebusiness establishment, that is to say, a fixed establishmentelsewhere, the location of such establishment; or(iii) where services are provided from more than one establishment, whether business or fixed, the establishment most directlyconcerned with the provision of the service; and(iv) in the absence of such places, the usual place of residence ofthe service provider.

(i) “location of the service receiver” means:-(a). where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which suchregistration has been obtained; (b). where the recipient of service is not covered under sub-clause(a):(i) the location of his business establishment; or(ii) where services are used at a place other than the businessestablishment, that is to say, a fixed establishment elsewhere, thelocation of such establishment; or(iii) where services are used at more than one establishment, whether business or fixed, the establishment most directlyconcerned with the use of the service; and(iv) in the absence of such places, the usual place ofresidence of the recipient of service. Explanation:- For the purposes of clauses (h) and (i), “usual placeof residence” in case of a body corporate means the place whereit is incorporated or otherwise legally constituted.

Explanation 2:- For the purpose of clause (i), in the case oftelecommunication service, the usual place of residence shall bethe billing address. “3. Place of provision generally - The place of provision ofa service shall be the location of the recipient of service: Provided that in case “of services other than online informationand database access or retrieval services” (Inserted vide Notification 46/2012- Service Tax) where the location of theALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH120SUPREME COURT REPORTS[2022] 17 S.C.R.service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service.4. Place of provision of performance based services.- Theplace of provision of following services shall be the location wherethe services are actually performed, namely:-(a) services provided in respect of goods that are required to bemade physically available by the recipient of service to the providerof service, or to a person acting on behalf of the provider of service, in order to provide the service: Provided that when such services are provided from a remotelocation by way of electronic means the place of provision shallbe the location where goods are situated at the time of provisionof service: Provided further that this clause shall not apply in the case of aservice provided in respect of goods that are temporarily importedinto India for repairs and are exported after the repairs withoutbeing put to any use in the taxable territory, other than that whichis required for such repair; (b) services provided to an individual, represented either as therecipient of service or a person acting on behalf of the recipient, which require the physical presence of the receiver or the personacting on behalf of the receiver, with the provider for the provisionof the service.7.

Place of provision of services provided at more than onelocation.-Where any service referred to in rules 4, 5 or 6 is providedat more than one location, including a location in the taxableterritory, its place of provision shall be the location in the taxableterritory where the greatest proportion of the service is provided.8. Place of provision of services where provider andrecipient are located in taxable territory.- Place of provisionof a service, where the location of the provider of service as wellas that of the recipient of service is in the taxable territory, shallbe the location of the recipient of service.9. Place of provision of specified services.-The place ofprovision of following services shall be the location of the serviceprovider:- ABCDEFGH121(a) Services provided by a banking company, or a financialinstitution, or a non-banking financial company, to account holders; (b)[x x x](c) Intermediary services; (d) Service consisting of hiring of all means of transport otherthan, -(i) aircrafts, and(ii) vessels except yachtsupto a period of one month.”(emphasis added)We may note here the relevant provisions of IGST Act.

Sub-Sections (14) and (15) of Section 2 are as under: “(14) location of the recipient of services means,––(a) where a supply is received at a place of business for whichthe registration has been obtained, the location of such place ofbusiness; (b) where a supply is received at a place other than the place ofbusiness for which registration has been obtained (a fixedestablishment elsewhere), the location of such fixed establishment; (c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the locationof the establishment most directly concerned with the receipt ofthe supply; and(d) in absence of such places, the location of the usual place ofresidence of the recipient; (15) location of the supplier of services means,––(a) where a supply is made from a place of business for whichthe registration has been obtained, the location of such place ofbusiness; (b) where a supply is made from a place other than the place ofbusiness for which registration has been obtained (a fixedestablishment elsewhere), the location of such fixed establishment; ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v.

UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH122SUPREME COURT REPORTS[2022] 17 S.C.R.(c) where a supply is made from more than one establishment, whether the place of business or fixed establishment, the locationof the establishment most directly concerned with the provisionof the supply; and(d) in absence of such places, the location of the usual place ofresidence of the supplier;” Sections 12 and 13 of the IGST Act read thus: Section 12. Place of supply of services where location ofsupplier and recipient is in India– (1) The provisions of thissection shall apply to determine the place of supply of serviceswhere the location of supplier of services and the location of therecipient of services is in India. (2) The place of supply of services, except the servicesspecified in sub-sections (3) to (14),––(a) made to a registered person shall be the location of suchperson; (b) made to any person other than a registered person shallbe,––(i) the location of the recipient where the address on recordexists; and(ii) the location of the supplier of services in other cases.

(3) The place of supply of services,––(a) directly in relation to an immovable property, including servicesprovided by architects, interior decorators, surveyors, engineersand other related experts or estate agents, any service providedby way of grant of rights to use immovable property or for carryingout or co-ordination of construction work; or(b) by way of lodging accommodation by a hotel, inn, guest house, home stay, club or campsite, by whatever name called, and includinga house boat or any other vessel; or(c) by way of accommodation in any immovable property fororganising any marriage or reception or matters related thereto, official, social, cultural, religious or business function includingservices provided in relation to such function at such property; or ABCDEFGH123(d) any services ancillary to the services referred to in clauses(a), (b) and (c), shall be the location at which the immovableproperty or boat or vessel, as the case may be, is located or intendedto be located: Provided that if the location of the immovable property or boator vessel is located or intended to be located outside India, theplace of supply shall be the location of the recipient.

Explanation.––Where the immovable property or boat or vesselis located in more than one State or Union territory, the supply ofservices shall be treated as made in each of the respective Statesor Union territories, in proportion to the value for servicesseparately collected or determined in terms of the contract oragreement entered into in this regard or, in the absence of suchcontract or agreement, on such other basis as may be prescribed. (4) The place of supply of restaurant and catering services, personalgrooming, fitness, beauty treatment, health service includingcosmetic and plastic surgery shall be the location where theservices are actually performed. (5) The place of supply of services in relation to training andperformance appraisal to,––(a) a registered person, shall be the location of such person; (b) a person other than a registered person, shall be the locationwhere the services are actually performed.

(6) The place of supply of services provided by way of admissionto a cultural, artistic, sporting, scientific, educational, entertainmentevent or amusement park or any other place and services ancillarythereto, shall be the place where the event is actually held orwhere the park or such other place is located. (7) The place of supply of services provided by way of,—(a) organisation of a cultural, artistic, sporting, scientific, educationalor entertainment event including supply of services in relation to aconference, fair, exhibition, celebration or similar events; or(b) services ancillary to organisation of any of the events orservices referred to in clause (a), or assigning of sponsorship tosuch events,––ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH124SUPREME COURT REPORTS[2022] 17 S.C.R.(i) to a registered person, shall be the location of such person; (ii) to a person other than a registered person, shall be the placewhere the event is actually held and if the event is held outsideIndia, the place of supply shall be the location of the recipient.

Explanation.––Where the event is held in more than one Stateor Union territory and a consolidated amount is charged for supplyof services relating to such event, the place of supply of suchservices shall be taken as being in each of the respective Statesor Union territories in proportion to the value for services separatelycollected or determined in terms of the contract or agreemententered into in this regard or, in the absence of such contract oragreement, on such other basis as may be prescribed. (8) The place of supply of services by way of transportation ofgoods, including by mail or courier to,––(a) a registered person, shall be the location of such person; (b) a person other than a registered person, shall be the locationat which such goods are handed over for their transportation.[Provided that where the transportation of goods is to a placeoutside India, the place of supply shall be the place of destinationof such goods.](9) The place of supply of passenger transportation serviceto,—(a) a registered person, shall be the location of such person; (b) a person other than a registered person, shall be theplace where the passenger embarks on the conveyance fora continuous journey: Provided that where the right to passage is given for future useand the point of embarkation is not known at the time of issue ofright to passage, the place of supply of such service shall bedetermined in accordance with the provisions of sub-section (2).Explanation.––For the purposes of this sub-section, the returnjourney shall be treated as a separate journey, even if the right topassage for onward and return journey is issued at the same time.

(10) The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall bethe location of the first scheduled point of departure of thatconveyance for the journey. ABCDEFGH125(11) The place of supply of telecommunication services includingdata transfer, broadcasting, cable and direct to home televisionservices to any person shall,—(a) in case of services by way of fixed telecommunication line, leased circuits, internet leased circuit, cable or dish antenna, bethe location where the telecommunication line, leased circuit orcable connection or dish antenna is installed for receipt of services; (b) in case of mobile connection for telecommunication and internetservices provided on post-paid basis, be the location of billingaddress of the recipient of services on the record of the supplierof services; (c) in cases where mobile connection for telecommunication, internet service and direct to home television services are providedon pre-payment basis through a voucher or any other means,––(i) through a selling agent or a re-seller or a distributor of subscriberidentity module card or re-charge voucher, be the address of theselling agent or re-seller or distributor as per the record of thesupplier at the time of supply; or(ii) by any person to the final subscriber, be the location wheresuch prepayment is received or such vouchers are sold; (d) in other cases, be the address of the recipient as per the recordsof the supplier of services and where such address is not available, the place of supply shall be location of the supplier of services: Provided that where the address of the recipient as per therecords of the supplier of services is not available, the place ofsupply shall be location of the supplier of services: Provided further that if such pre-paid service is availed or therecharge is made through internet banking or other electronic modeof payment, the location of the recipient of services on the recordof the supplier of services shall be the place of supply of suchservices.

Explanation.––Where the leased circuit is installed in more thanone State or Union territory and a consolidated amount is chargedfor supply of services relating to such circuit, the place of supplyof such services shall be taken as being in each of the respectiveALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH126SUPREME COURT REPORTS[2022] 17 S.C.R.States or Union territories in proportion to the value for servicesseparately collected or determined in terms of the contract oragreement entered into in this regard or, in the absence of suchcontract or agreement, on such other basis as may be prescribed. (12) The place of supply of banking and other financial services, including stock broking services to any person shall be the locationof the recipient of services on the records of the supplier ofservices: Provided that if the location of recipient of services is not on therecords of the supplier, the place of supply shall be the location ofthe supplier of services.

(13) The place of supply of insurance services shall,––(a) to a registered person, be the location of such person; (b) to a person other than a registered person, be the location ofthe recipient of services on the records of the supplier of services. (14) The place of supply of advertisement services to the CentralGovernment, a State Government, a statutory body or a localauthority meant for the States or Union territories identified in thecontract or agreement shall be taken as being in each of suchStates or Union territories and the value of such supplies specificto each State or Union territory shall be in proportion to the amountattributable to services provided by way of dissemination in therespective States or Union territories as may be determined interms of the contract or agreement entered into in this regard or, in the absence of such contract or agreement, on such other basisas may be prescribed.

Section 13. Place of supply of services where location ofsupplier or location of recipient is outside India – (1) Theprovisions of this section shall apply to determine the place ofsupply of services where the location of the supplier of servicesor the location of the recipient of services is outside India. (2) The place of supply of services except the services specifiedin sub-sections (3) to (13) shall be the location of the recipient ofservices: Provided that where the location of the recipient of services isnot available in the ordinary course of business, the place of supplyshall be the location of the supplier of services. ABCDEFGH127(3) The place of supply of the following services shall be thelocation where the services are actually performed, namely :—(a) services supplied in respect of goods which are required to bemade physically available by the recipient of services to the supplierof services, or to a person acting on behalf of the supplier ofservices in order to provide the services: Provided that when such services are provided from a remotelocation by way of electronic means, the place of supply shall bethe location where goods are situated at the time of supply ofservices: Provided further that nothing contained in this clause shall applyin the case of services supplied in respect of goods which aretemporarily imported into India for repairs and are exported afterrepairs without being put to any other use in India, than that whichis required for such repairs or treatment or process; (b) services supplied to an individual, represented either as therecipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the personacting on his behalf, with the supplier for the supply of services.

(4) The place of supply of services supplied directly in relation toan immovable property, including services supplied in this regardby experts and estate agents, supply of accommodation by a hotel, inn, guest house, club or campsite, by whatever name called, grantof rights to use immovable property, services for carrying out orco-ordination of construction work, including that of architects orinterior decorators, shall be the place where the immovable propertyis located or intended to be located. (5) The place of supply of services supplied by way of admissionto, or organisation of a cultural, artistic, sporting, scientific, educational or entertainment event, or a celebration, conference, fair, exhibition or similar events, and of services ancillary to suchadmission or organisation, shall be the place where the event isactually held. (6) Where any services referred to in sub-section (3) or sub-section (4) or sub-section (5) is supplied at more than one location, including a location in the taxable territory, its place of supply shallbe the location in the taxable territory.ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v.

UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH128SUPREME COURT REPORTS[2022] 17 S.C.R.(7) Where the services referred to in sub-section (3) or sub-section(4) or sub-section (5) are supplied in more than one State or Unionterritory, the place of supply of such services shall be taken asbeing in each of the respective States or Union territories and thevalue of such supplies specific to each State or Union territoryshall be in proportion to the value for services separately collectedor determined in terms of the contract or agreement entered intoin this regard or, in the absence of such contract or agreement, onsuch other basis as may be prescribed. (8) The place of supply of the following services shall be thelocation of the supplier of services, namely:––(a) services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders; (b) intermediary services; (c) services consisting of hiring of means of transport, includingyachts but excluding aircrafts and vessels, up to a period of onemonth.

Explanation.––For the purposes of this sub-section, theexpression,––(a) “account” means an account bearing interest to the depositor, and includes a non-resident external account and a non-residentordinary account; (b) “banking company” shall have the same meaning as assignedto it under clause (a) of section 45A of the Reserve Bank of IndiaAct, 1934 (2 of 1934);(c) ‘‘financial institution” shall have the same meaning as assignedto it in clause (c) of section 45-I of the Reserve Bank of IndiaAct, 1934 (2 of 1934);(d) “non-banking financial company” means,––(i) a financial institution which is a company; (ii) a non-banking institution which is a company and which hasas its principal business the receiving of deposits, under anyscheme or arrangement or in any other manner, or lending in anymanner; or ABCDEFGH129(iii) such other non-banking institution or class of such institutions, as the Reserve Bank of India may, with the previous approval ofthe Central Government and by notification in the Official Gazette, specify.

(9) The place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destinationof such goods. (10) The place of supply in respect of passenger transportationservices shall be the place where the passenger embarks on theconveyance for a continuous journey. (11) The place of supply of services provided on board aconveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumedwhile on board, shall be the first scheduled point of departure ofthat conveyance for the journey. (12) The place of supply of online information and database accessor retrieval services shall be the location of the recipient of services. Explanation.––For the purposes of this sub-section, personreceiving such services shall be deemed to be located in the taxableterritory, if any two of the following noncontradictory conditionsare satisfied, namely:––(a) the location of address presented by the recipient of servicesthrough internet is in the taxable territory; (b) the credit card or debit card or store value card or chargecard or smart card or any other card by which the recipient ofservices settles payment has been issued in the taxable territory; (c) the billing address of the recipient of services is in the taxableterritory; (d) the internet protocol address of the device used by the recipientof services is in the taxable territory; (e) the bank of the recipient of services in which the accountused for payment is maintained is in the taxable territory; (f) the country code of the subscriber identity module card usedby the recipient of services is of taxable territory; ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v.

UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH130SUPREME COURT REPORTS[2022] 17 S.C.R.(g) the location of the fixed land line through which the service isreceived by the recipient is in the taxable territory. (13) In order to prevent double taxation or non-taxation of thesupply of a service, or for the uniform application of rules, the Government shall have the power to notify any description ofservices or circumstances in which the place of supply shall bethe place of effective use and enjoyment of a service.”(emphasis added)39. The provisions of the 2012 Rules and the relevant provisionsof IGST Act are to a great extent pari materia. As far as the location ofservice provider in this case (HGOs) is concerned, there is no disputethat all of them have to be registered under Rule 4 of the Service TaxRules, 1994 and therefore, as per sub-clause (a) of clause (h) of Rule 2,the location of HGO will be the premises for which registration has beengranted to HGO. Such premises are necessarily in India.

Even assumingthat any other sub-clauses of clause (h) are applicable, the location ofthe service provider, in this case, will be in India. As far as the locationof service receiver under clause (i) of Rule 2 is concerned, in this case, the service receiver is the Haj pilgrim who is obviously not registered. Therefore, sub-clause (a) of clause (i) will have no application. Thereare four categories listed in sub-clause (b) of clause (i) of Rule 2. Thefirst category is of business establishments. The second category is ofservices which are used at a place other than the business establishment. The third category is where services are used at more than oneestablishment. On the face of it, the cases of Haj pilgrims undertakingthe Haj pilgrimage through HGOs will not be covered by these threecategories. What is applicable to them is the fourth category which isthe usual place of residence of the recipient of service.

It is not the placewhere the service recipient receives service or is rendered service. It isthe place of ordinary residence of the service recipient which, in thiscase, will be in taxable territory. As provided in Rule 3, the place ofprovision of service is the location of the recipient of service. In thiscase, the recipients of service from HGOs are Indian residents andaccordingly, their place of residence in India will be the place of provisionof service. Rule 8 provides that where the location of the provider ofservice as well as that of the recipient of service is in the taxable territory, the place of provision of service is the location of the recipient of service. Hence, in this case, the place of provision of service is the location of ABCDEFGH131the service receiver in accordance with clause (i) of Rule 2 which willbe in taxable territory.40. However, reliance was sought to be placed by the petitionerson Rule 4, in particular Clause (b) thereof.

Rule 4 is applicable toperformance based service which provides that the place of provision oftwo services set out in the said Rule shall be the location where servicesare actually performed. Clause (a) of Rule 4 is applicable to servicesprovided in respect of goods which obviously will not apply in the presentcase. The petitioners are relying upon clause (b) of Rule 4. The title of Rule 4 suggests that it is applicable to performance based services. HGOsdo not render performance based services looking to the nature of theservices they render, which we have discussed above in detail. Therefore, Clause (b) of Rule 4 will not apply to HGOs. What will apply is Rule 3which will mean that the place of provision of the service shall be thelocation of the recipient of service in accordance with Rule 2(i)(b)(iv).Thus, service is rendered by HGOs to the Haj pilgrims within taxableterritory. That is how the charging section will apply.41.

There was an attempt made to argue that Haj pilgrimage willbe an event covered by Rule 6, which reads thus:

Rule 6. Place of provision of services relating to events.–The Place of provision of services provided by way of admissionto, or organization of, a cultural, artistic, sporting, scientific, educational, or entertainment event, or a celebration, conference, fair, exhibition, or similar events, and of services ancillary to suchadmission, shall be the place where the event is actually held.

Religious ceremonies and religious functions are not covered by Rule 6. The words ‘similar events’ will have to be construed ejusdemgeneris. Hence, the Haj pilgrimage cannot be an event.42. Even if we assume that the service rendered by HGOs to Hajpilgrims is transportation service, by virtue of Rule 9 of the 2012 Rules, the place of provision of service will be the location of service provider. In view of sub-Section (10) of Section 12 of the IGST Act, the place ofsupply of service will be the place where the passenger embarks.43.

As per Item (iv) of sub-clause (b) of Clause (i) of Rule 2 ofthe said Rules of 2012, the location of the service receiver will be theusual place of residence of the Haj pilgrim in India. Therefore, the servicerendered by the HGOs to Haj Pilgrims is taxable for service tax as theALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH132SUPREME COURT REPORTS[2022] 17 S.C.R.service to Haj pilgrims is provided or agreed to be provided in taxableterritory. The service is rendered by providing or agreeing to provideHaj pilgrimage tour package.44. We may reiterate here that as prayed by the parties duringarguments, we are not going into the issue of extra-territorial operationsof the laws relating to service tax and the said issue is left open. Eventhe issue of the validity of the 2012 Rules has not been seriously canvassedat the time of oral submissions. In one of the writ petitions, the ground ofviolation of Article 25 of the Constitution of India has been taken withoutmaking even an attempt to substantiate the same.45.

The petitioners have relied upon the decision of this Court inthe case of All–India Federation of Tax Practitioners & Ors.3 andcertain decisions of High Courts and CESTAT. The said decisions applyto the fact situation before 1st July, 2012 when negative tax regime wasnot in force. We are concerned in these cases with the negative servicetax regime which commenced from 1st July 2012. Therefore, the samewill not apply to these cases.APPLICABILITY OF EXEMPTION NOTIFICATION46. The question is whether the exemption granted under the MegaExemption Notification will apply in this case. As mentioned earlier, the Exemption Notifications under the IGST and the GST Acts so far as the Haj pilgrimage is concerned, are pari materia with the Mega ExemptionNotification. It is, therefore, necessary to advert to the Mega ExemptionNotification. The Mega Exemption Notification contains a list of serviceswhich are exempted from service tax leviable under Section 66B. In thiscase, Clauses 5 and 5A are pressed into service by the petitioners whichread thus: “5.

Services by a person by way of-(a) renting of precincts of a religious place meant for generalpublic, owned or managed by an entity registered as a charitableor religious trust under section 12AA of the Income-tax Act,1961(hereinafter referred to as the Income-tax Act), or a trust oran institution registered under sub clause (v) of clause (23C) ofsection 10 of the Income-tax Act or a body or an authority coveredunder clause (23BBA) of section 10 of the Income-tax Act;” substituted vide Notification 40/2016- Service Tax; or ABCDEFGH133(b) conduct of any religious ceremony;5A. Services by a specified organisation in respect of areligious pilgrimage facilitated by the Ministry of ExternalAffairs of the Government of India, under bilateralarrangement;” (emphasis added)47. Ex facie, Clause 5A will have no application as it is applicableto services by specified organisations in respect of a religious pilgrimagefacilitated by the Ministry of External affairs of the Government of Indiaunder bilateral arrangement.

The specified organisations have beendefined in paragraph 1(1)(a)(zfa) of the Mega Exemption Notification. Specified organisations, as stated therein, are only two categories oforganisations. The first one is Kumaon Mandal Vikas Nigam Limited, aGovernment of Uttarakhand Undertaking and Haj Committee or StateCommittee under the said Act of 2002. The Haj Committee rendersservices in relation to the Haj pilgrimage which is facilitated by the Ministryof External Affairs of the Government of India under the bilateralarrangement with the Kingdom of Saudi Arabia.48. In support of the contention that the Clause 5(b) of the MegaExemption Notification is applicable, Shri Arvind P. Datar, the learnedsenior counsel with all fairness pointed out that in the case of Commissioner of Customs (Import) Mumbai v. Dilip Kumar and Company and Ors.20, a Constitution Bench of this Court held that anexemption notification should be interpreted strictly and in case of anyambiguity in the exemption notification, the same must be interpreted infavour of the revenue.

In paragraph 66 and in particular 66.1 to 66.3 inthe case of Dilip Kumar and Company20 it was held thus:

66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assesseeto show that his case comes within the parameters of theexemption clause or exemption notification.66.2. When there is ambiguity in exemption notificationwhich is subject to strict interpretation, the benefit of suchambiguity cannot be claimed by the subject/assessee and itmust be interpreted in favour of the Revenue.20 2018 (9) SCC 1ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH134SUPREME COURT REPORTS[2022] 17 S.C.R.66.3. The ratio in Sun Export case [Sun ExportCorpn. v. Collector of Customs, (1997) 6 SCC 564] is not correctand all the decisions which took similar view as in Sun Exportcase [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC564] stand overruled.

(emphasis added)49.

But Shri Datar urged that when the exemption is for beneficialpurposes, a different rule will apply. In the case of Government of Kerala& Anr. v. Mother Superior Adoration Convent2 relied upon by ShriDatar, this Court referred to its decision in the case of Commissionerof Customs (Preventive) Mumbai v. M. Ambalal and Company21and held that the law laid down in the case of M. Ambalal and Company21 has not been disturbed by the Constitution Bench in thecase of Dilip Kumar and Company20. In paragraph 23, this Court inthe case of Mother Superior Adoration Convent2 held thus: “23. Likewise, even under the Customs Act, this Court in Commr.of Customs v. M. Ambalal & Co. [Commr. of Customs v. M.Ambalal & Co., (2011) 2 SCC 74] made a clear distinction betweenexemptions which are to be strictly interpreted as opposed tobeneficial exemptions having as their purpose—encouragementor promotion of certain activities.

This case felicitously put thelaw thus follows : (SCC p. 80, para 16)“16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification. Therule regarding exemptions is that exemptions shouldgenerally be strictly interpreted but beneficial exemptionshaving their purpose as encouragement or promotion ofcertain activities should be liberally interpreted. Thiscomposite rule is not stated in any particular judgment inso many words. In fact, majority of judgments emphasisethat exemptions are to be strictly interpreted while someof them insist that exemptions in fiscal statutes are to beliberally interpreted giving an apparent impression that theyare contradictory to each other. But this is only apparent. Aclose scrutiny will reveal that there is no real contradiction21 2011 (2) SCC 74 ABCDEFGH135amongst the judgments at all.

The synthesis of the views isquite clearly that the general rule is strict interpretationwhile special rule in the case of beneficial and promotionalexemption is liberal interpretation. The two go very wellwith each other because they relate to two different sets ofcircumstances.” (emphasis added)Thereafter, in paragraph 25, this Court referred to and quoted therelevant portion of the Constitution Bench decision in the case of DilipKumar and Company20. In paragraphs 26 and 27, this Court proceededto hold thus: “26. It may be noticed that the five-Judge Bench judgment[Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1]did not refer to the line of authority which made a distinctionbetween exemption provisions generally and exemption provisionswhich have a beneficial purpose. We cannot agree with ShriGupta’s contention that sub silentio the line of judgments quabeneficial exemptions has been done away with by this five-JudgeBench.

It is well settled that a decision is only an authority forwhat it decides and not what may logically follow from it(see Quinn v. Leathem [Quinn v. Leathem, 1901 AC 495 (HL)]as followed in State of Orissa v. Sudhansu Sekhar Misra [Stateof Orissa v. Sudhansu Sekhar Misra, (1968) 2 SCR 154 : AIR1968 SC 647] , SCR at pp. 162-63 : AIR at pp. 651-52, para 13).27. This being the case, it is obvious that the beneficialpurpose of the exemption contained in Section 3(1)(b) mustbe given full effect to, the line of authority being applicableto the facts of these cases being the line of authority whichdeals with beneficial exemptions as opposed to exemptionsgenerally in tax statutes. This being the case, a literalformalistic interpretation of the statute at hand is to beeschewed. We must first ask ourselves what is the objectsought to be achieved by the provision, and construe thestatute in accord with such object.

And on the assumptionthat if any ambiguity arises in such construction, suchambiguity must be in favour of that which is exempted.ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH136SUPREME COURT REPORTS[2022] 17 S.C.R.Consequently, for the reasons given by us, we agree with theconclusions reached by the impugned judgments [MotherSuperior v. State of Kerala, 2007 SCC OnLine Ker 578] , [UnityHospital (P) Ltd. v. State of Kerala, 2010 SCC OnLine Ker 4679]of the Division Bench and the Full Bench.” (emphasis added)50. The submission of the petitioners is that clause (5) of the Mega Exemption Notification contains a beneficial exemption andtherefore, the same will have to be construed in accordance with theobject sought to be achieved. The submission is that as there is anambiguity in the construction of Clause 5, the construction in favour ofthat which is exempted should be accepted.51.

Now, adverting to sub-clause (b) of Section 5, we find that theexemption has been granted in respect of services by a person by wayof conduct of any religious ceremony. Thus, it refers to a person who isnaturally the service provider. The sub-Clause (b) applies when the serviceprovider renders service by way of conduct of any religious ceremony. The notification does not say that service provided to the service receiverto enable him to conduct religious ceremony, has been exempted. It onlyexempts service provided by way of conduct of any religious ceremony.52. It must be noted here that Clause 5A of the same MegaExemption Notification grants exemption to the service rendered by HajCommittees in respect of a religious pilgrimage. Thus, the same MegaExemption Notification makes a clear distinction between ‘religiousceremony’ and ‘religious pilgrimage’. As Haj Committees render servicesonly in respect of Haj pilgrimage, the religious pilgrimage referred to in Clause 5A as regards the Haj Committee, is Haj pilgrimage.

Thus, the Mega Exemption Notification exempts the two specified organisationsthat render services in respect of a religious pilgrimage. This exemptionunder Clause 5A is not applicable to HGOs as the HGOs are not thespecified organizations. If the intention and object was to provide servicetax exemption to services provided by HGOs in respect of religiouspilgrimage, the notification would have specifically provided so. However, the exemption as regards religious pilgrimage has been confined only tothe services rendered by the specified organisations in respect of a religiouspilgrimage facilitated by the Ministry of External Affairs of the Government of India under a bilateral arrangement. An exemption hasnot been provided to any other service provider rendering service in ABCDEFGH137respect of a religious pilgrimage. Whereas, sub-Clause (b) of Clause 5is applicable to services rendered by way of conduct of any religious“ceremony”.

A clear distinction has been made between a serviceprovided in respect of religious pilgrimage and a service rendered byway of conduct of any religious ceremony. We may give an example ofa person engaging a priest to perform certain religious ceremonies orritual or puja on his behalf. In such a case, the priest renders service byway of conducting a religious ceremony. The service rendered by HGOsto Haj pilgrims is to facilitate them to reach at the destination to performrituals/religious ceremonies. No religious ceremony is performed orconducted by the HGOs. The religious ceremony is conducted by Hajpilgrims or by someone else in the Kingdom of Saudi Arabia. Accordingto us, there is absolutely no ambiguity in sub-clause (b) of clause 5 andtherefore, there is no occasion to apply the test laid down by this Courtin the case of Mother Superior Adoration Convent2.53. The submission of Shri Datar, learned senior counsel was thatin Haj pilgrimage there are six entities involved which include concernedMinistry of the Kingdom of Saudi Arabia, the Government of India, Tawafa establishments, Molliums, approved HGOs and Haj pilgrims.

His submission is that the word ‘person’ used in sub-clause (b) of clause5 of the exemption notification will also include the plural of the term‘person’. The submission is that a Haj pilgrim will fall in the category of‘person’. According to us, this submission is completely fallacious. Theword ‘person’ used in Clause 5 refers to a service provider and not tothe receiver of service. Even assuming that some services are providedby the Kingdom of Saudi Arabia, the Government of India, Tawafaestablishments or Maollims to Haj pilgrims from India, it may be notedhere that they are not subjected to payment of service tax. The servicetax is levied on HGOs being service providers. The real question iswhether HGOs are rendering service by way of conduct of any religiousceremony. As held earlier, HGOs have no role to play in actual conductof religious ceremonies which are a part of Haj pilgrimage. The servicerendered by HGOs is by way of providing air bookings, arranging for thestay of Haj pilgrims in Saudi Arabia, arranging for food while they are in Saudi Arabia, arranging for foreign exchange and arranging registrationwith Tawafa establishment in the Kingdom of Saudi Arabia.54.

An attempt was made to bifurcate the services rendered byHGOs into two parts. The first part is of the service rendered regardingALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH138SUPREME COURT REPORTS[2022] 17 S.C.R.providing air booking and making available foreign exchange. Asubmission was made that service tax or GST will be payable on thesetwo items and for the rest of the services rendered, service tax or GSTwill not be payable as the services rendered are outside the taxableterritory. HGOs render service to Haj pilgrims in respect of the Hajpilgrimage by providing a single package which consists of several partssuch as making air booking, providing foreign exchange and makingarrangements for stay and catering in Saudi Arabia, etc. HGOs offer acomprehensive package of services relating to Haj pilgrimage. Theyreceive charges from Haj pilgrims for the entire package.

It is not thecase of the HGOs that they charge separately for different servicesforming a part of the comprehensive package. Only a part of the packagecannot be picked up for invoking exemption. A particular service renderedcannot be divided into parts. For the purposes of levy of service tax, theservice rendered cannot be dissected like this. The service rendered asa whole by the HGOs to the Haj pilgrims will have to be taken intoaccount. This is apart from the fact that no part of the package offeredby HGOs involves a service by way of conduct of any religious ceremony. Therefore, in our considered view, sub-clause (b) of clause 5 of the Mega Exemption Notification cannot be invoked by the HGOs. We mayalso note here that the exemption under sub-clause (b) of clause 5 is tothe service provider. We are noting this as one of the petitions has beenfiled by a service recipient.55. Before we go to the argument regarding discrimination, wemay note here that with effect from 1st July 2017, service tax becamepayable under the IGST Act.

Even GST Act came into force from thesame date. Under both the enactments, tax is payable on the supply ofgoods or services. Sub-Section (2) of Section 13 of IGST Act providesthat the place of supply of services except services specified in Sub-Sections (3) to (13) shall be the location of the recipient of services. Under sub-Section (1) of Section 5 of the IGST Act, service tax is payableon services supplied inter-state. Under sub-Section (1) of Section 9 ofthe GST Act, service tax is leviable on services supplied intra-state. None of the sub-sections (3) to (13) of Section 13 of the IGST Act isapplicable in this case. Clause (14) of Section 2 of the IGST Act definesthe location of the recipient of service. This provision is pari materiawith the same definition under the 2012 Rules. As in case of 2012 Rules, there are four categories. The service received from HGOs in connectionwith the Haj pilgrimage falls in the fourth category which lays down that ABCDEFGH139the location of the recipient of service will be the location of usual placeof residence of the recipient.

Similar are the provisions in GST Act exceptthat the service tax is leviable on services supplied intra-State. Therefore, as far as the services rendered by HGOs are concerned, there is nomaterial change brought about by the GST and the IGST Acts exceptfor the fact that the service tax is chargeable under these two statutesand not under the Finance Act. Thus, the HGOs supply service to theservice recipient having location in India. The service is rendered byproviding a package for the Haj Pilgrimage to the service recipient whois located in the taxable territory. That is how the service provided byHGOs is taxable for service tax.CONSIDERATION OF THE ISSUE OF DISCRIMINATION56. The other issue which arises for consideration is about thesubmissions based on discrimination made under the Mega ExemptionNotification between the services rendered by specified organisationsand the services rendered by other service providers in respect of religiouspilgrimage.57.

The submission of the petitioners is that there is no differencebetween the service rendered by HGOs and the service rendered by the Haj Committee to the Haj pilgrims. It is contended that the nature ofservice rendered by both is the same. The submission of the petitionersis that for the purposes of this exemption, the Haj Committee cannotconstitute a class in itself. In short, the submission is that two equals arebeing treated as unequal. The question is whether Haj Committees underthe 2002 Act, can be treated as a separate class. Article 14 does notprohibit the classification of persons or class of persons provided it is notarbitrary. The classification has to be reasonable. The classification ispermissible provided it is founded on an intelligible differentia which mustdistinguish the persons grouped together from those who are left out. Moreover, the classification must have a rational nexus to the objectssought to be achieved by it.

While we examine this question in the contextof the infringement of Article 14 of the Constitution of India, it must beremembered that only on the ground that both HGOs and the HajCommittee render service to the same class of persons, the classificationmade by treating the Haj Committee as a separate class, cannot bequestioned. In a given case, different classes of service providers maybe rendering the same service to the same class of service recipients. That, per se, does not amount to discrimination. The attack on the groundALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH140SUPREME COURT REPORTS[2022] 17 S.C.R.of discrimination will have to be considered in the context of taxablepersons namely, the Haj Committee and HGOs. Under Section 3 of thesaid Act of 2002, the Haj Committee of India was constituted. Similarly, under Section 17, the State Haj Committees were constituted.

Both thecategories of Haj Committees are body corporate, having perpetualsuccession and a common seal with the power to acquire, hold and disposeof movable and immovable properties. Section 4 determines thecomposition of the Haj Committee of India and Section 18 determinesthe composition of State Haj Committees. Section 9 lays down the dutiesof the Haj Committee, which reads thus: “9. Duties of Committee-(1) The duties of the Committee shallbe-(i) to collect and disseminate information useful to pilgrims, and toarrange orientation and training programmes for pilgrims; (ii) to advise and assist pilgrims during their stay at the embarkationpoints in India, while proceeding to or returning from pilgrimage, in all matters including vaccination, inoculation, medical inspection, issue of pilgrim passes and foreign exchange, and to liaise withthe local authorities concerned in such matters; (iii) to give relief to pilgrims in distress; (iv) to finalise the annual Haj plan with the approval of the CentralGovernment, and execute the plan, including the arrangementsfor travel by air or any other means, and to advise in mattersrelating to accommodations; (v) to approve the budget estimates of the Committee and submitit to the Central Government at least three months before thebeginning of the financial year for its concurrence; (vi) to co-ordinate with the Central Government, railways, airwaysand travel agencies for the purpose of securing travelling facilitiesfor pilgrims; (vii) to generally look after the welfare of the pilgrims; (viii) to publish such proceedings of the Committee and suchmatters of interest to pilgrims as may be determined by bye-lawsmade in this behalf by the Committee; (ix) to discharge such other duties in connection with Haj as maybe prescribed by the Central Government.

ABCDEFGH141(2) The Central Government shall afford all reasonable assistanceto the Committee in the discharge of the duties specified in sub-section (1).” 58. Under Section 27 of the 2002 Act, it is the duty of the StateCommittees to implement the policies and directions of the Haj Committeeand perform prescribed duties. The functions and duties assigned to the Haj Committee need to be considered in the context of the preamble ofthe 2002 Act. The object is to establish Committees for makingarrangements for the Muslims for the pilgrimage of Haj. The HGOs areotherwise the tour operators carrying on business of arranging tours. They get themselves registered as HGOs. As can be noticed from Section9, the functions of the Haj Committee are not confined only to makingarrangements for enabling the pilgrims to undertake the Haj pilgrimage. Its first duty is to collect and disseminate the information useful to thepilgrims and to arrange orientation and training programmes for thepilgrims.

It is the duty of the Haj Committee to give relief to pilgrims andvisitors. It is its duty to generally look after the welfare of the pilgrims. The Haj Committee has an important duty to assist the pilgrims in distress. One of the duties is to finalize the Annual Haj Plan with the approval ofthe Central Government and to execute the same. The Haj Committeeis under an obligation to publish proceedings of the Committee. UnderSection 30, it is the duty of the Committee to create Central Haj Fund. Similarly, under Section 32, the State Committees are under an obligationto create State Haj Funds. The Central Government has the power toreconstitute the Haj Committee and to remove the Chairperson, the Vice-Chairperson and the Members of the Committee. There is a similarpower vesting in the State Government in respect of the State Committees. Thus, the Haj Committees are statutory bodies working under the controland supervision of the Government.

The Haj Committees are the agenciesand instrumentalities of the State. Apart from arranging visits of Hajpilgrims for the purposes of Haj pilgrimage, there are important statutoryduties assigned to the Haj Committee which we have set out above. Asper clause (b) of Section 30, money collected from pilgrims for theperformance of the Haj pilgrimage becomes a part of the Central HajFund, which can be utilized only for the purposes specified under Section31. The funds can be used only for the purposes of paying salary andallowances to the officers and employees of the Committee and forpayment of charges and expenses incidental to the objects specified in Section 9. Other expenditure can be made only with the approval of theALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH142SUPREME COURT REPORTS[2022] 17 S.C.R.Central Government. Therefore, when the Haj Committee facilitatesthe Haj pilgrims by making arrangements for their visit to the Kingdomof Saudi Arabia for undertaking the Haj pilgrimage, there is a completeabsence of profit motive.

On the contrary, the money received by the Haj Committee from the Haj pilgrims goes to the statutory fund, whichin turn, has to be used inter alia for the benefit of Haj pilgrims. Even thebudget of the Haj Committee is required to be submitted to the CentralGovernment. Thus, the Central Government has all pervasive controlover the Haj Committee. The State Governments have the same controlover the State Committee. On the other hand, there are no onerousduties attached to HGOs. They earn profit by rendering service to Hajpilgrims. Except for the stringent conditions for the registration, the Government has no control over HGOs.59. Shri Gopal Sankarnarayanan, the learned senior counsel reliedupon certain observations made by this Court in the case of RafiqueSheikh Bhikan1. He relied upon paragraphs 11 and 12 of the saidjudgment, which read thus: “11. The pilgrim is actually the person behind all this arrangement.

For many of the pilgrims Haj is once in a lifetime pilgrimage andthey undertake the pilgrimage by taking out the savings madeover a lifetime, in many cases especially for this purpose. Hajconsists of a number of parts and each one of them has to beperformed in a rigid, tight and time-bound schedule. In case dueto any mismanagement in the arrangements regarding the journeyto Saudi Arabia or stay or travelling inside Saudi Arabia any of theparts is not performed or performed improperly then the pilgrimloses not only his life savings but more importantly he loses the Haj. It is not unknown that on landing in Saudi Arabia a pilgrimfinds himself abandoned and completely stranded.12. It is, thus, clear that in making selection for theregistration of PTOs the primary object and purpose of theexercise cannot be lost sight of. The object of registeringPTOs is not to distribute the Haj seats to them for makingbusiness profits but to ensure that the pilgrim may be ableto perform his religious duty without undergoing anydifficulty, harassment or suffering.

A reasonable profit tothe PTO is only incidental to the main object.” (emphasis added) ABCDEFGH143However, the learned counsel has not referred to paragraph 10 ofthe same judgment, which takes a note of very substantial profits earnedby the PTOs. Paragraph 10 reads thus: “10. From these facts, it is not difficult to deduce that thedispute between the private operators/travel agents andthe Government of India in regard to registration as PTOsarises from a conflict of object and purpose. For most ofthe private operators/travel agents registration as PTOsis mainly a question of more profitable business. Under thebilateral agreement no PTO can be given a quota of lessthan fifty pilgrims. Normally, a quota of fifty pilgrims wouldmean, on an average and by conservative standards, a profitof rupees thirty-five to fifty lakhs. This in turn means thatany private operator/travel agent, successful in gettingregistered as a PTO with the Government of India wouldeasily earn rupees thirty-five to fifty lakhs in one-and-a-half to two months and may then relax comfortably for therest of the year without any great deal of business from anyother source.

For the Government of India, on the other hand, the registration of the PTOs, is for the purpose to ensure acomfortable, smooth and trouble-free journey, stay andperformance of Haj by the pilgrims going through the PTOs.” (emphasis added)In fact, what is observed in paragraph 12 is in the context of thecontroversy before this Court. It can be seen from paragraph 17 of thesaid decision that the controversy was about the stringent conditionsimposed for the registration of PTOs. The observations in paragraph 12are in that context. This Court held that the object of putting such stringentconditions is to ensure that proper service is rendered to the Haj pilgrims. In this context, the aforesaid observation has been made that thereasonable profit to PTOs is incidental. It is not the case of the HGOs inthese petitions that they are doing any kind of charitable work by providingservice to Haj pilgrims.

It is not their case that they are not earning anyprofit while providing a package to Haj pilgrims. They are rendering theservices with the object of earning profit.60. Thus, the Haj Committee is a statutory committee which isentrusted with various functions for the welfare of Haj pilgrims. Moreover, ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH144SUPREME COURT REPORTS[2022] 17 S.C.R.the profit motive is completely absent in the case of the Haj Committee. The money received by the Haj Committee from the pilgrims for renderingservice goes to a statutory fund created under the 2002 Act which is tobe used only for the purposes specified in the 2002 Act. That is thereason why the Haj Committee constitutes a class in itself when it comesto rendering service to Haj pilgrims. It is a separate class as distinguishedfrom HGOs. There is an intelligible differentia for this classification.

The object of exemption in paragraph 5A of the Mega ExemptionNotification is to promote the activity of the specified organisations ofrendering service for the religious pilgrimage. Both the organisationswhich are specified in the notification are statutory organisations overwhich the Government has an effective control. Moreover, the servicerendered by the specified organisations to the devotees is not with theobject of making profit. Therefore, there is a nexus between theclassification made and the object sought to be achieved by grantingexemptions.61. The learned senior counsel relied upon the decision of this Court in the case of S. K. Dutta6. Certain provisions of the Income TaxAct, 1961 granting exemption to the members of the Scheduled Tribeswere the subject matter of challenge before the High Court. Whilegranting exemption to the members of the Scheduled Tribes, the class ofthe government servants who were the members of Scheduled Tribeswas excluded from the benefits.

It is in this context that the Apex Courtobserved that the classification made on the basis of imaginary distinctioncannot be a valid classification. There has to be a reasonable andsubstantial distinction for the purposes of making a valid classification. On facts, the said decision will not help the petitioners.62. In the meeting of the Fitment Committee, there weredeliberations on the representation made by the petitioners. The decision/recommendation of the Fitment Committee contains valid reasons formaking a distinction between HGOs and Haj Committees. We arereproducing the reasons recorded by fitment committee on the plea ofdiscrimination which read thus: “Ground 3: GST exemption [SL No. 60 of Notification No.12/2017-CTR and Sl. No. 63 of Notification No. 9/2017-ITR]has been granted only to the pilgrims for whom HajCommittee of India is organizes the Haj/Umrah pilgrimageand not for the pilgrims for whom HGO[PTO] organizes ABCDEFGH145and conducts the pilgrimage.

It is discriminatory andviolative of Article 14 of the Constitution of India. Services provided by a specified organisation in respect of areligious pilgrimage facilitated by the Government of India, undera bilateral arrangement, is exempt from GST. “Specifiedorganizations” are Kumaon Mandal Vikas Nigam Limited, aGovernment of Uttarakhand Undertaking and ‘Committee’ or“State Committee as defined in section 2 of the Haj CommitteeAct, 2002 (35 of 2002).GST is leviable on tour operator service for organizing Haj/Umrahpilgrimage tour. GST exemption is available only on services ofreligious pilgrimage facilitated by Central govt or State govt, undera bilateral arrangement. There is no exemption available to servicesof religious pilgrimage of any religion provided by any private touroperator. Therefore, existing exemption available on services ofreligious pilgrimage facilitated by Government of India is notdiscriminatory.

The legislature intends to exclude private touroperators from the purview of Service Tax/GST exemption. Catena of court judgments have upheld that legislature has widelatitude in taxation to choose the subject and people to be taxed. Article 14 prohibits class legislation and not reasonableclassification. It is very much within the powers oflegislature to categorize goods and services for the purposeof taxation in such manner as meets the policies andobjectives of the government. The legislation intends todifferentiate between tour operator services rendered bypublic and private entities. There is no discriminationbetween religious pilgrims. All pilgrims who undertake Haj/Umrah pilgrimage or any other religious pilgrimage throughprivate tour operators are treated equally. The Constitutional bench of Supreme Court in R.K. Garg v. Unionof India(1981) 4 SCC 675, laid down the test of classification byreference to article 14 was as under –“The clarification must not be arbitrary but must be rational, that is to say, it must not only be based on some qualities orcharacteristics which are to be found in all the person groupedtogether and not in others who are left out but those qualitiesALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v.

UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH146SUPREME COURT REPORTS[2022] 17 S.C.R.or characteristics must have a reasonable relation to the objectof the legislation. In order to pass the test, two conditionsmust be fulfilled, namely, (1) that the classification must befounded on an intelligible differentia, which distinguishesthose that are grouped together from others, and (2) thatdifferentia must have a rational relation to the object soughtto be achieved by the Act.” The classification of pilgrims undertaking Haj/Umrahpilgrimage tours through Haj Committee of India underbilateral arrangement and those undertaking tours throughprivate tour operators is based on an intelligible differentiahaving a rational relation to the object sought to be achievedby the statute in question. Therefore, services Tax/GSTexemption on services provided by a specified organization inrespect of a religious pilgrimage facilitated by Government of Indiaunder bilateral arrangement are not discriminatory and not violativeof Article 14 of the Constitution.

As discussed above, the service of organizing and conduct of tourfor Haj/Umrah pilgrims by private tour operators is taxable underGST. It is not covered under any of the existing exemptions fromGST. Therefore, the request to not levy GST or to clarify thatGST is not leviable on the same is not acceptable. As regards the request for exemption GST on the services of Hajand Umrah tour provided by Haj Group Operators [Private TourOperators], the same has no merit. The private tour operatorssupply such services on purely commercial basis to pilgrimswho can afford it. GST is an indirect tax. The burden of thetax is not on the suppliers but on the recipients. The servicewas taxable in Service Tax also. There is no justificationfor granting a new exemption. Exemptions not only cause lossof revenue but also block input tax credit chain and creditdistortions.” (emphasis added)The reasons recorded are based on consideration of relevantfactors.63.

Strong reliance was placed by the Revenue on the decision ofthis Court in the Case of M. Jhangir Bhatusha & Ors13. The subject ABCDEFGH147of this petition was an order passed by the Government under sub-Section(2) of Section 25 of the Customs Act, 1962. By the said order, import ofthe specified oils by the State Trading Corporation was made liable tocustoms duty at the rate of 5% only and total exemption from auxiliaryand additional duty was granted. On the other hand, import of the samespecified oils by private importers was made liable to customs duty atthe rate of 12.5% ad velorem. Discrimination was alleged in this caseby contending that there is no rational basis for treating State TradingCorporation differently. In paragraphs 13 to 15 of the said decision, this Court held thus: “13. First, as to the contention that both the reasons set forth inthe exemption notifications under Section 25(2) of the Act arewithout foundation.

It seems to us that the two reasons set forthin the exemption notifications can constitute a reasonable basisfor those notifications. It does appear from the material beforeus that international prices were fluctuating, and althoughthey may have shown a perceptible fall there was theapprehension that because of the history of fluctuationsthere was a possibility of their rising in the future. The needto protect the domestic market is always present, andtherefore encouragement had to be given to the importseffected by the State Trading Corporation by reducing therate of customs duty levied on them. This involved a longterm perspective, since the exclusive monopoly to importthese edible oils was now entrusted to the State TradingCorporation. What appears to have dominated the policy of thegovernment in issuing the exemption notifications was theconsideration that the domestic prices of vanaspati should bemaintained at reasonable levels.

It cannot be doubted that theentire edible oil market is an integrated one, and that it is notreasonable to treat any one of the edible oils or vanaspati inisolation. It is a well accepted fact that vanaspati manufacturersconstitute a powerful organised sector in the edible oil market, and a high vanaspati price would encourage an unauthoriseddiversion of the edible oils to vanaspati manufacturing units, resulting in a scarcity in the edible oil market, giving rise to erraticprices and depriving consumers of access to edible oils. The needfor preventing vanaspati prices ruling high was also to preventpeople normally using vanaspati from switching over to other edibleALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH148SUPREME COURT REPORTS[2022] 17 S.C.R.oils, thus leading to an imbalance in the oil market. An overallview made it necessary to ensure that domestic prices of vanaspatiremained at reasonable levels.

To all these considerations thelearned Attorney-General has drawn our attention, and we cannotsay that they are not reasonably related to the policy underlyingthe exemption orders. So that the government would have sufficientsupplies of edible at hand in order to feed the market, the learnedAttorney-General says, it was considered desirable and in thepublic interest to reduce the rate of customs duty to 5 per cent onthe imports made by the State Trading Corporation. Now it isthe Central Government which has to be satisfied, as theauthority appointed by Parliament under Section 25(2), thatit is necessary in the public interest to make the specialorders of exemption. It has set out the reasons whichprompted it to pass the orders. In our opinion, thecircumstances mentioned in those notifications cannot besaid to be irrelevant or unreasonable. It is not for this Courtto sit in judgment on the sufficiency of those reasons.

Thelimitations on the jurisdiction of the court in cases wherethe satisfaction has been entrusted to executive authorityto judge the necessity for passing orders is well definedand has been long accepted.14. It is true that the State dons the robes of a trader when itenters the field of commercial activity, and ordinarily it can claimno favoured treatment. But there may be clear and good reasonfor making a departure. Viewed in the background of thereasons for granting a monopoly to the State TradingCorporation, acting as an agent or nominee of the CentralGovernment in importing the specified oils, it will be evidentthat policy considerations rendered it necessary to makeconsummation of that policy effective by imposing aconcessional levy on the imports. No such concession iscalled for in the case of the private importers who, in anyevent, are merely working out contracts entered into bythem with foreign sellers before 2-12-1978.15.

We are also not satisfied that any of the private importershave made out that their business will be crippled or ruined inview of the rate of customs duty visited on their imports. The ABCDEFGH149material before us is not sufficient to warrant any conclusion intheir favour.” (emphasis added)64. We are tempted to quote what the majority view in the caseof R. K. Garg v. Union of India & Ors.22 on the approach of the Courtin such matters. We quote paragraph 8:“8. Another rule of equal importance is that laws relatingto economic activities should be viewed with greaterlatitude than laws touching civil rights such as freedom ofspeech, religion etc. It has been said by no less a personthan Holmes, J., that the legislature should be allowedsome play in the joints, because it has to deal with complexproblems which do not admit of solution through anydoctrinaire or strait-jacket formula and this is particularlytrue in case of legislation dealing with economic matters, where, having regard to the nature of the problems requiredto be dealt with, greater play in the joints has to be allowedto the legislature.

The court should feel more inclined to givejudicial deference to legislative judgment in the field of economicregulation than in other areas where fundamental human rightsare involved. Nowhere has this admonition been more felicitouslyexpressed than in Morey v. Doud [351 US 457 : 1 L Ed 2d 1485(1957)] where Frankfurter, J., said in his inimitable style:

In the utilities, tax and economic regulation cases, thereare good reasons for judicial self-restraint if not judicialdeference to legislative judgment. The legislature after allhas the affirmative responsibility. The courts have only thepower to destroy, not to reconstruct. When these are addedto the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruledby events — self-limitation can be seen to be the path tojudicial wisdom and institutional prestige and stability.

The Court must always remember that “legislation is directed topractical problems, that the economic mechanism is highly sensitiveand complex, that many problems are singular and contingent,22 1981 (4) SCC 675ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATIONMUMBAI v.

UNION OF INDIA [ABHAY S. OKA, J.] ABCDEFGH150SUPREME COURT REPORTS[2022] 17 S.C.R.that laws are not abstract propositions and do not relate to abstractunits and are not to be measured by abstract symmetry”. (emphasis added)In the matter of grant of exemptions in tax matters, latitude has tobe given to the decision making. Ultimately, it is also a matter of policy. We have already held that there is a rational basis for classifying specifiedorganisations as a class and keeping out the Private Tour Operatorsfrom exemption under Clause 5A. We will have to show judicial self-restraint in this case.65. Hence, we are of the considered view that the argumentsbased on discrimination have no substance at all, as HGOs and the HajCommittees do not stand on par and in fact, the Haj Committees constitutea separate class by themselves, which is based on a rational classificationwhich has a nexus with the object sought to be achieved.66.

Therefore, there is no merit in the challenge in the petitions. We have already clarified that we have not dealt with the issue of extra-territorial operation of the service tax regime which is kept open to bedecided in appropriate proceedings, as requested by the parties.67. We are, therefore, of the view that the petitions are devoid ofmerit and the same are, accordingly, dismissed. No order as to costs. Nidhi Jain and Amarendra KumarWrit petitions dismissed. (Assisted by : Iram Jan, LCRA)