All India Haj Umrah Tour Organizer Association, Mumbai VS Union of India

The Haj pilgrimage from India involves thousands of pilgrims who can participate either through the Haj Committee of India or through registered Hajj Group Organizers (HGOs), according to a bilateral treaty between India and Saudi Arabia. This treaty specifies that the Haj pilgrimage from India must be organized exclusively through these authorized bodies.

In India, the service tax regime was initiated in 1994 under the Finance Act. Initially, only a limited number of services were taxable, but subsequent Finance Acts expanded this list significantly. By the time Act No. 23 of 2012 came into effect on July 1, 2012, a negative list regime was introduced, encompassing more than 100 services under the service tax net

The Haj pilgrimage from India is managed either by the Haj Committee of India or Hajj Group Organisers (HGOs), under a bilateral treaty with Saudi Arabia. This agreement restricts Haj pilgrimage facilitation exclusively to these authorized entities.

In 1994, India introduced service tax under the Finance Act, initially applying to a limited number of services. Over time, subsequent Finance Acts expanded this to over 100 services. Act No. 23 of 2012 introduced a negative list regime from July 1, 2012, amending Sections 66-B and 66-C of the Finance Act. Section 66-B levied a service tax of 12% (later increased to 14%) on all services not specified in the negative list. Section 66-C empowered the Central Government to determine service provision rules, leading to the Place of Provision of Services Rules, 2012.

On June 20, 2012, Mega Exemption Notification no. 25 of 2012–ST was issued, providing various exemptions. Paragraph 5(b) exempted services related to religious ceremonies. Paragraph 5A exempted services provided by specified organizations for religious pilgrimages arranged under bilateral agreements by the Ministry of External Affairs, Government of India. The notification defines these specified organizations.

The Haj pilgrimage is a significant religious journey undertaken by thousands of Indian pilgrims, organized either through the Haj Committee of India or through registered Haj Group Organizers (HGOs). This process is governed by a bilateral treaty between India and Saudi Arabia, restricting Haj pilgrimage arrangements to these authorized entities.

In the realm of taxation, India introduced the service tax regime in 1994 under the Finance Act. Initially, only a few services were taxable, but subsequent amendments expanded this to over 100 services. The Negative List regime, introduced in 2012 by Act No.23 of 2012, aimed to streamline taxation by exempting certain categories of services, including religious ceremonies, as per the Mega Exemption Notification no.25 of 2012–ST. Paragraph 5A of this notification specifically exempted services related to religious pilgrimages facilitated under bilateral arrangements, including those by the Haj Committee and certain state bodies defined under the Haj Committee Act, 2002.

Despite these exemptions, some HGOs and Private Tour Operators (PTOs) contested the service tax levied on Haj pilgrimage services. Following a directive from the court in December 2019, these entities submitted a representation to the Government of India seeking exemption. However, the representation was ultimately rejected by the GST Council in March 2020, leading to ongoing legal and administrative considerations regarding the tax treatment of such services under the Integrated Goods and Services Tax Act, 2017 (IGST Act) and the Central Goods and Services Tax Act, 2017 (GST Act).

This regulatory and legal landscape underscores the complex interplay between religious freedoms, bilateral agreements, and taxation policies in India concerning the Haj pilgrimage services.

The Fitment Committee’s decision, communicated by the Government of India in a letter dated 5th May 2020, has significant implications as outlined in various writ petitions filed primarily by organizations representing Haj Group Organizers (HGOs) and Private Tour Operators (PTOs). Among these petitions, Writ Petition (C) No.1329 of 2020 stands out, filed by an individual seeking permission to undertake the Haj pilgrimage. The majority of petitions contest the rejection of representations, with some seeking a declaration that service tax laws do not apply to services provided by HGOs and PTOs for Haj and Umrah pilgrimages. Additionally, challenges to the validity of Rules 8 and 14 of the 2012 Rules are raised in some petitions, though arguments on their validity have not yet been fully presented.

Counter affidavits have been filed in Writ Petition (C) Nos.755, 856, and 896 of 2020, which are considered as common affidavits within this group of cases. Notably, the current focus of these petitions does not extend to issues of extra-territorial jurisdiction.

The Fitment Committee’s decision, communicated by the Government of India on 5th May 2020, has sparked a series of legal challenges primarily from organizations representing Haj Group Organisers (HGOs) and Private Tour Operators (PTOs). These challenges are predominantly aimed at contesting the rejection of representations regarding the applicability of service tax laws to services provided for Haj and Umrah pilgrimages. Among the petitions, one stands out, filed by an individual seeking permission for the Haj pilgrimage.

Many petitions seek a declaration that service tax laws do not extend to services provided by HGOs and PTOs for Haj and Umrah pilgrimages. Additionally, some petitions question the validity of Rules 8 and 14 of the 2012 Rules, although arguments on their validity have not been extensively presented.

In response, counter affidavits have been consolidated in several petitions, addressing common issues within this group of cases.

Senior counsel Shri Arvind P. Datar has presented detailed arguments supporting the writ petitions. He highlighted exemptions under the Mega Exemption Notification, particularly pointing to exemptions for services related to religious ceremonies and pilgrimages facilitated by bilateral arrangements with the Ministry of External Affairs. He underscored that both the IGST Exemption Notification and the Mega Exemption Notification provide similar exemptions, which encompass specific pilgrimages like Kailash Manasarovar Yatra and Haj. He emphasized the definitions of specified organizations under these notifications, particularly those related to Haj pilgrimage.

The discussions have centered around the nature of service tax as an indirect tax and the specific exemptions provided under relevant notifications, stressing the applicability of these exemptions to services related to religious pilgrimages.

The Fitment Committee, as communicated by the Government of India in a letter dated May 5, 2020, has been pivotal in addressing a series of writ petitions predominantly filed by organizations representing Haj Group Organizers (HGOs) and Private Tour Operators (PTOs). These petitions primarily contest the rejection of representations concerning the applicability of service tax laws to services provided for Haj and Umrah pilgrimages, as well as the validity of Rules 8 and 14 of the 2012 Rules.

In response, Shri Arvind P. Datar, representing the petitioners, argued extensively. He highlighted provisions within the Mega Exemption Notification, particularly paragraph 5(b), which exempts services involving the conduct of religious ceremonies. Datar also pointed to paragraph 5A, which grants exemptions for services rendered by specified organizations under bilateral arrangements for religious pilgrimages facilitated by the Ministry of External Affairs. This includes the Haj pilgrimage among others, underlining the indirect tax burden borne by Haj pilgrims due to service tax, which these exemptions aim to alleviate.

Datar emphasized that while earlier efforts like Haj subsidies aimed to assist financially disadvantaged Muslims in undertaking the Haj pilgrimage, the current focus is on interpreting tax exemptions to similarly reduce financial burdens. He contended that the interpretation of these exemptions by tax authorities should not limit them only to those directly performing religious ceremonies but should extend to HGOs and PTOs facilitating such pilgrimages.

Thus, the ongoing legal proceedings reflect a broader debate on the scope and application of tax exemptions concerning religious pilgrimages, seeking to balance fiscal policies with the religious rights and financial considerations of pilgrims.

Following the Fitment Committee’s decision communicated by the Government of India on May 5, 2020, several writ petitions have been filed, primarily by organizations representing Haj Group Organizers (HGOs) and Private Tour Operators (PTOs). These petitions challenge the rejection of representations and seek declarations regarding the applicability of service tax laws to services provided for Haj and Umrah pilgrimages, along with challenges to specific rules.

The crux of the issue revolves around interpretations of tax exemptions under various notifications. Senior counsel Arvind P. Datar argued extensively on behalf of the petitioners, citing exemptions under the Mega Exemption Notification for services related to religious ceremonies and specific exemptions for services provided in relation to religious pilgrimages like Haj. He emphasized that these exemptions aim to alleviate financial burdens on Haj pilgrims, as any tax burden ultimately affects them.

Datar also highlighted historical context, including previous rulings on Haj subsidies and the unique role of HGOs and PTOs in facilitating Haj pilgrimages. The courts have recognized these organizations as crucial in organizing and managing comprehensive pilgrimage packages, including travel from India to Saudi Arabia, accommodations, Haj ceremony arrangements, and return journeys.

Moreover, he pointed out that while the majority of Haj pilgrims are handled by the Haj Committee, HGOs and PTOs cater to a limited number but provide essential services that include airfare and logistical support, thus justifying their distinct role and the need for tax exemptions.

In conclusion, the petitions underscore the significant role of HGOs and PTOs in facilitating Haj pilgrimages and argue for interpretations of tax laws that alleviate financial burdens on pilgrims, aligning with the religious and logistical complexities inherent in the Haj pilgrimage process. The outcome of these petitions will likely impact the regulatory framework and financial considerations for future Haj pilgrimages organized by these entities.

Based on the details provided, here is a summary recommendation concerning the Fitment Committee’s decision communicated by the Government of India on May 5th, 2020:

The Fitment Committee, in response to a batch of petitions predominantly filed by organizations representing Haj Group Organizers (HGOs) and Private Tour Operators (PTOs), with only one petition from an individual seeking to undertake the Haj pilgrimage, reviewed challenges against orders rejecting representations. Many petitions contested the applicability of service tax laws to services provided by HGOs and PTOs for Haj and Umrah pilgrimages. Specifically, there were challenges to the validity of Rules 8 and 14 of the 2012 Rules, though arguments on their validity were not extensively addressed.

Shri Arvind P. Datar, representing the petitioners, emphasized several points. Firstly, he highlighted exemptions under the Mega Exemption Notification, arguing that services related to religious ceremonies, including Haj, are exempted. He noted similarities in exemptions for specified organizations facilitating religious pilgrimages under bilateral arrangements. He underscored that service tax imposes an indirect burden on Haj pilgrims, contrary to the intent of reducing their financial strain through exemptions.

Datar referenced previous legal precedents, including decisions on Haj subsidies and the role of HGOs and PTOs as crucial facilitators recognized by the courts. These organizations manage comprehensive travel packages, encompassing travel from India to Saudi Arabia, accommodation, pilgrimage ceremonies, and return journeys. The process, particularly for Haj after Ramadan, is meticulously structured, adhering to strict timelines essential for the pilgrimage’s validity.

Additionally, he highlighted the complex network involved in Haj pilgrimages, involving ministries from both India and Saudi Arabia, Tawafa Establishments, Maollims, approved HGOs, and the pilgrims themselves. He argued for a broad interpretation of the term “person” in exemption notifications to include all stakeholders, thereby extending the exemption’s scope to cover services provided by HGOs and benefiting Haj pilgrims directly.

In conclusion, the Fitment Committee’s decision should consider these factors comprehensively, ensuring that any interpretation aligns with the intent to alleviate financial burdens on Haj pilgrims while recognizing the essential roles of HGOs and PTOs in facilitating these religious obligations effectively. This approach would uphold the principles established in previous legal rulings and respect the intricacies of Haj pilgrimage logistics.

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