Holding

Services provided by Haj Group Organizers to Indian Haj pilgrims are taxable, and the Mega Exemption Notification does not exempt them.

Summary

The petitioners, a consortium of Haj Group Organizers (HGOs) and private tour operators, challenged the levy of service tax/GST on the packages they provide to Indian Haj pilgrims, arguing that the place of supply is outside India and that the Mega Exemption Notification should exempt their services. The Court examined the Place of Provision of Services Rules, 2012 and the Integrated GST Act, determining that the location of the service recipient – the pilgrim – is his usual residence in India, making the place of supply taxable. It held that the exemption under clause 5(b) applies only to services performed by the service provider involving a religious ceremony, which HGOs do not conduct, and that clause 5A exempts only specified statutory organisations (Haj Committees), not private operators. The Court also found the classification of Haj Committees as a separate class to be reasonable and non‑discriminatory under Article 14. Consequently, the services of HGOs are liable to tax and the writ petitions were dismissed.

Issues considered

The place of supply of services rendered by HGOs to Haj pilgrims under the 2012 Rules and IGST Act.
Whether clause 5(b) of the Mega Exemption Notification exempts services of HGOs.
Whether clause 5A of the Mega Exemption Notification applies to HGOs.
Whether the classification of Haj Committees as a separate class violates Article 14.
The applicability of the negative service‑tax regime post‑1 July 2012.

Legislation cited

Finance Act, 1994 (Service Tax provisions)s. 66B, s. 66C
GST Acts. 13, s. 5, s. 9
Haj Committee Act, 2002s. 17, s. 2, s. 27, s. 3, s. 30, s. 31, s. 32, s. 9
IGST Acts. 12, s. 13, s. 2(14), s. 5(1)
Integrated Goods and Services Tax Act, 2017s. 12, s. 13, s. 2(14), s. 5(1)
Place of Provisions of Services Rules, 2012s. Rule 2(h), s. Rule 2(i), s. Rule 3, s. Rule 4, s. Rule 6, s. Rule 8, s. Rule 9

Subjects

service taxGSTplace of supplyexemptionMega Exemption NotificationHaj pilgrimageArticle 14discriminationclassificationprivate tour operatorsHaj Committee

Judgment

92 [2022]
SUPREME COURT 17 S.C.R. 92
REPORTS [2022] 17 S.C.R.

A ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION
MUMBAI
v.
UNION OF INDIA & ORS.
B (Writ Petition (C) No. 755 of 2020)
JULY 26, 2022
[A.M. KHANWILKAR, ABHAY S. OKA AND
C.T. RAVIKUMAR, JJ.]
Haj matters:
C
Integrated Goods and Services Tax Act, 2017 — ss. 2(14),5(1),
12, 13 —Place of Provisions of Services Rules, 2012 – rr. 2, 3, 4, 7,
and 8 –Petitioners-Hajj group organizers (HGO) and Private Tour
operators (PTO) rendering service to Haj pilgrims for the Haj
pilgrimage for performing the religious activity of Haj/Umrah –
D Liability to pay service tax –Plea of the petitioners that if the location
of the service recipient is outside the taxable territory, service tax
cannot be levied; and that the levy is discriminatory as it exempts
certain hajis who undertake the pilgrimage through the Haj
Committee – Held: Service rendered by the HGOs or PTOs to Haj
Pilgrims is taxable for service tax as the service to Haj pilgrims is
E
provided or agreed to be provided in a taxable territory – As regards
exemption to Haj Committee, the Haj Committee is a statutory
committee which is entrusted with various functions for the welfare
of Haj pilgrims–Profit motive is completely absent in the case of the
Haj Committee–Thus, the Haj Committee constitutes separate class
F in itself as distinguished from HGOs when it comes to rendering
service to Haj pilgrims – There is an intelligible differentia for this
classification–No part of the package offered by HGOs involves a
service by way of conduct of any religious ceremony – Thus, the
sub-clause (b) of clause 5 of the Mega Exemption Notification cannot
be invoked by the HGOs – Exemption under sub-clause (b) of clause
G
5 is to the service provider–HGOs have no role to play in actual
conduct of religious ceremonies which are a part of Haj pilgrimage
– Service rendered by HGOs to Haj pilgrims is to facilitate them to
reach at the destination to perform rituals/religious ceremonies –
No religious ceremony is performed or conducted by the HGOs–
H Religious ceremony is conducted by Haj pilgrims or by someone
92
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MUMBAI v. UNION OF INDIA

else in the Kingdom of Saudi Arabia –Thus, exemption under clause A
5A is not applicable to HGOs –Mega Exemption Notification no.25
of 2012–ST.
Dismissing the writ petitions, the Court
HELD: 1.1: The provisions of the Place of Provisions of
Services Rules, 2012 and the relevant provisions of Integrated B
Goods and Services Tax Act, 2017 are to a great extent pari
materia. As far as the location of service provider in this case
(HGOs) is concerned, there is no dispute that all of them have to
be registered under Rule 4 of the Service Tax Rules, 1994 and
therefore, as per sub-clause (a) of clause (h) of Rule 2, the location C
of HGO will be the premises for which registration has been
granted to HGO. Such premises are necessarily in India. Even
assuming that any other sub-clauses of clause (h) are applicable,
the location of the service provider, in this case, will be in India.
As far as the location of service receiver under clause(i) of Rule
2 is concerned, in this case, the service receiver is the Haj pilgrim D
who is obviously not registered. Therefore, sub- clause (a) of
clause (i) will have no application. There are four categories listed
in sub-clause (b) of clause (i) of Rule 2. The first category is of
business establishments. The second category is of services which
are used at a place other than the business establishment. The E
third category is where services are used at more than one
establishment. On the face of it, the cases of Haj pilgrims
undertaking the Haj pilgrimage through HGOs will not be covered
by these three categories. What is applicable to them is the fourth
category which is the usual place of residence of the recipient of
service. It is not the place where the service recipient receives F
service or is rendered service. It is the place of ordinary
residence of the service recipient which, in this case, will be in
taxable territory. As provided in Rule 3, the place of provision of
service is the location of the recipient of service. In this case,
the recipients of service from HGOs are Indian residents and G
accordingly, their place of residence in India will be the place of
provision of service. Rule 8 provides that where the location of
the provider of service 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
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A of provision of service is the location of the service receiver in
accordance with clause (i) of Rule 2 which will be in taxable
territory. [Para 39][130-C-H; 131-A]
1.2 Rule 4 is applicable to performance based service which
provides that the place of provision of two services set out in the
B said Rule shall be the location where services are actually
performed. Clause (a) of Rule 4 is applicable to services provided
in respect of goods which obviously will not apply in the present
case. The petitioners are relying upon clause (b) of Rule 4. The
title of Rule 4 suggests that it is applicable to performance based
C services. HGOs do not render performance based services
looking to the nature of the services they render. Therefore,
Clause (b) of Rule 4 will not apply to HGOs. What will apply is
Rule 3 which will mean that the place of provision of the service
shall be the location of the recipient of service in accordance
D with Rule 2(i)(b)(iv). Thus, service is rendered by HGOs to the
Haj pilgrims within taxable territory. That is how the charging
section will apply.[Para 40][131-A-D]
1.3 Religious ceremonies and religious functions are not
covered by Rule 6. The words ‘similar events’ will have to be
E construed ejusdem generis. Hence, the Haj pilgrimage cannot
be an event. Even if we assume that the service rendered by
HGOs to Haj pilgrims 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 of supply of service will be the
F
place where the passenger embarks.[Paras 41 and 42][131-F-G]
1.4 As per Item (iv) of sub-clause (b) of Clause (i) of Rule 2
of the said Rules of 2012, the location of the service receiver will
be the usual place of residence of the Haj pilgrim in India.
G Therefore, the service rendered by the HGOs to Haj Pilgrims is
taxable for service tax as the service to Haj pilgrims is provided
or agreed to be provided in taxable territory. The service is
rendered by providing or agreeing to provide Haj pilgrimage tour
package.[Para 44][131-G-H; 132-A]

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1.5 The Exemption Notifications under the IGST and the A
GST Acts so far as the Haj pilgrimage is concerned, are pari
materia with the Mega Exemption Notification. It is, therefore,
necessary to advert to the Mega Exemption Notification. The
Mega Exemption Notification contains a list of services which
are exempted from service tax leviable under Section 66B. Ex
B
facie, Clause 5A will have no application as it is applicable to
services by specified organisations in respect of a religious
pilgrimage facilitated by the Ministry of External affairs of the
Government of India under bilateral arrangement. The specified
organisations have been defined in paragraph 1(1)(a)(zfa) of the
Mega Exemption Notification. Specified organisations, as stated C
therein, are only two categories of organisations. The first one is
Kumaon Mandal Vikas Nigam Limited, a Government of
Uttarakhand Undertaking and Haj Committee or State Committee
under the said Act of 2002. The Haj Committee renders services
in relation to the Haj pilgrimage which is facilitated by the Ministry
D
of External Affairs of the Government of India under the bilateral
arrangement with the Kingdom of Saudi Arabia.[Paras 46 and
47][132-E-F; 133-B-C]
1.6 Adverting to sub-clause (b) of Section 5, it is found that
the exemption has been granted in respect of services by a person
by way of conduct of any religious ceremony. Thus, it refers to a E
person who is naturally the service provider. The sub- Clause
(b) applies when the service provider renders service by way of
conduct of any religious ceremony. The notification does not say
that service provided to the service receiver to enable him to
conduct religious ceremony, has been exempted. It only exempts F
service provided by way of conduct of any religious
ceremony.[Para 51][136-D]
1.7 Clause 5A of the same Mega Exemption Notification
grants exemption to the service rendered by Haj Committees in
respect of a religious pilgrimage. Thus, the same Mega G
Exemption Notification makes a clear distinction between
‘religious ceremony’ and ‘religious pilgrimage’. As Haj
Committees render services only 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
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96 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Notification exempts the two specified organisations that render
services in respect of a religious pilgrimage. This exemption
under Clause 5A is not applicable to HGOs as the HGOs are not
the specified organizations. If the intention and object was to
provide service tax exemption to services provided by HGOs in
respect of religious pilgrimage, the notification would have
B
specifically provided so. However, the exemption as regards
religious pilgrimage has been confined only to the services
rendered by the specified organisations in respect of a religious
pilgrimage facilitated by the Ministry of External Affairs of the
Government of India under a bilateral arrangement. An exemption
C has not been provided to any other service provider rendering
service in respect of a religious pilgrimage. Whereas, sub-Clause
(b) of Clause 5 is applicable to services rendered by way of conduct
of any religious “ceremony”. A clear distinction has been made
between a service provided in respect of religious pilgrimage
and a service rendered by way of conduct of any religious
D
ceremony. The service rendered by HGOs to Haj pilgrims is to
facilitate them to reach at the destination to perform rituals/
religious ceremonies. No religious ceremony is performed or
conducted by the HGOs. The religious ceremony is conducted
by Haj pilgrims or by someone else in the Kingdom of Saudi
E Arabia. According to us, there is absolutely no ambiguity in sub-
clause (b) of clause 5 and therefore, there is no occasion to apply
the test laid down by this Court in the case of Mother Superior
Adoration Convent case. [Para 52][136-E-H; 137-A-C]
1.8 The submission was that in Haj pilgrimage there are
F six entities involved which include concerned Ministry of the
Kingdom of Saudi Arabia, the Government of India, Tawafa
establishments, Molliums, approved HGOs and Haj pilgrims; that
the word ‘person’ used in sub-clause (b) of clause 5 of the
exemption notification will also include the plural of the term
‘person’; and that that a Haj pilgrim will fall in the category of
G ‘person’. This submission is completely fallacious. The word
‘person’ used in Clause 5 refers to a service provider and not to
the receiver of service. Even assuming that some services are
provided by the Kingdom of Saudi Arabia, the Government of

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India, Tawafa establishments or Maollims to Haj pilgrims from A
India, it may be noted here that they are not subjected to payment
of service tax. The service tax is levied on HGOs being service
providers. The real question is whether HGOs are rendering
service by way of conduct of any religious ceremony. HGOs have
no role to play in actual conduct of religious ceremonies which
B
are a part of Haj pilgrimage. The service rendered by HGOs is
by way of providing air bookings, arranging for the stay of Haj
pilgrims in Saudi Arabia, arranging for food while they are in Saudi
Arabia, arranging for foreign exchange and arranging registration
with Tawafa establishment in the Kingdom of Saudi Arabia.[Para
53][137-D-G] C
1.9 An attempt was made to bifurcate the services rendered
by HGOs into two parts. The first part is of the service rendered
regarding providing air booking and making available foreign
exchange. A submission was made that service tax or GST will
be payable on these two items and for the rest of the services D
rendered, service tax or GST will not be payable as the services
rendered are outside the taxable territory. HGOs render service
to Haj pilgrims in respect of the Haj pilgrimage by providing a
single package which consists of several parts such as making
air booking, providing foreign exchange and making
arrangements for stay and catering in Saudi Arabia, etc. HGOs E
offer a comprehensive package of services relating to Haj
pilgrimage. They receive charges from Haj pilgrims for the entire
package. It is not the case of the HGOs that they charge
separately for different services forming a part of the
comprehensive package. Only a part of the package cannot be F
picked up for invoking exemption. A particular service rendered
cannot be divided into parts. For the purposes of levy of service
tax, the service rendered cannot be dissected like this. The
service rendered as a whole by the HGOs to the Haj pilgrims
will have to be taken into account. This is apart from the fact that
no part of the package offered by HGOs involves a service by G
way of conduct of any religious ceremony. Therefore, sub-clause
(b) of clause 5 of the Mega Exemption Notification cannot be
invoked by the HGOs. The exemption under sub-clause (b) of
clause 5 is to the service provider. [Para 54][137-H; 138-A-E]
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98 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 1.10 With effect from 1st July 2017, service tax became
payable under the IGST Act. Even GST Act came into force from
the same date. Under both the enactments, tax is payable on the
supply of goods or services. Sub-Section (2) of Section 13 of IGST
Act provides that the place of supply of services except services
specified in Sub-Sections (3) to (13) shall be the location of the
B
recipient of services. Under sub- Section (1) of Section 5 of the
IGST Act, service tax is payable on services supplied inter-state.
Under sub-Section (1) of Section 9 of the 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 is applicable in this case.
C Clause (14) of Section 2 of the IGST Act defines the location of
the recipient of service. This provision is pari materia with the
same definition under the 2012 Rules. As in case of 2012 Rules,
there are four categories. The service received from HGOs in
connection with the Haj pilgrimage falls in the fourth category
which lays down that the location of the recipient of service will
D
be the location of usual place of residence of the recipient. Similar
are the provisions in GST Act except that the service tax is
leviable on services supplied intra-State. Therefore, as far as the
services rendered by HGOs are concerned, there is no material
change brought about by the GST and the IGST Acts except for
E the fact that the service tax is chargeable under these two statutes
and not under the Finance Act. Thus, the HGOs supply service
to the service recipient having location in India. The service is
rendered by providing a package for the Haj Pilgrimage to the
service recipient who is located in the taxable territory. That is
how the service provided by HGOs is taxable for service tax.
F
[Para 55][138-E-H; 139-A-C]
1.11 The question is whether Haj Committees under the
2002 Act, can be treated as a separate class. Article 14 does not
prohibit the classification of persons or class of persons provided
it is not arbitrary. The classification has to be reasonable. The
G classification is permissible provided it is founded on an
intelligible differentia which must distinguish the persons grouped
together from those who are left out. Moreover, the classification
must have a rational nexus to the objects sought to be achieved
by it. While we examine this question in the context of the
H infringement of Article 14 of the Constitution of India, it must be
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 99
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remembered that only on the ground that both HGOs and the A
Haj Committee render service to the same class of persons, the
classification made by treating the Haj Committee as a separate
class, cannot be questioned. In a given case, different classes of
service providers may be rendering the same service to the same
class of service recipients. That, per se, does not amount to
B
discrimination. The attack on the ground of discrimination will
have to be considered in the context of taxable persons namely,
the Haj Committee and HGOs. Under Section 3 of the said Act
of 2002, the Haj Committee of India was constituted. Similarly,
under Section 17, the State Haj Committees were constituted.
Both the categories of Haj Committees are body corporate, C
having perpetual succession and a common seal with the power
to acquire, hold and dispose of movable and immovable
properties. Section 4 determines the composition of the Haj
Committee of India and Section 18 determines the composition
of State Haj Committees. Section 9 lays down the duties of the
D
Haj Committee. [Para 57][139-E-H; 140-A-C]
1.12 Under Section 27 of the 2002 Act, it is the duty of the
State Committees to implement the policies and directions of
the Haj Committee and perform prescribed duties. The functions
and duties assigned to the Haj Committee need to be considered
in the context of the preamble of the 2002 Act. The object is to E
establish Committees for making arrangements for the Muslims
for the pilgrimage of Haj. The HGOs are otherwise the tour
operators carrying on business of arranging tours. They get
themselves registered as HGOs. As can be noticed from Section
9, the functions of the Haj Committee are not confined only to F
making arrangements for enabling the pilgrims to undertake the
Haj pilgrimage. Its first duty is to collect and disseminate the
information useful to the pilgrims and to arrange orientation and
training programmes for the pilgrims. It is the duty of the Haj
Committee to give relief to pilgrims and visitors. It is its duty to
generally look after the welfare of the pilgrims. The Haj G
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 of the Central Government and to execute the same.
The Haj Committee is under an obligation to publish proceedings
of the Committee. Under Section 30, it is the duty of the H
100 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Committee to create Central Haj Fund. Similarly, under Section
32, the State Committees are under an obligation to create State
Haj Funds. The Central Government has the powerto reconstitute
the Haj Committee and to remove the Chairperson, the Vice-
Chairperson and the Members of the Committee. There is a
similar power vesting in the State Government in respect of the
B
State Committees. Thus, the Haj Committees are statutory bodies
working under the control and supervision of the Government.
The Haj Committees are the agencies and instrumentalities of
the State. Apart from arranging visits of Haj pilgrims for the
purposes of Haj pilgrimage, there are important statutory duties
C assigned to the Haj Committee which we have set out above. As
per clause (b) of Section 30, money collected from pilgrims for
the performance of the Haj pilgrimage becomes a part of the
Central Haj Fund, which can be utilized only for the purposes
specified under Section 31. The funds can be used only for the
purposes of paying salary and allowances to the officers and
D
employees of the Committee and for payment of charges and
expenses incidental to the objects specified in Section 9. Other
expenditure can be made only with the approval of the Central
Government. Therefore, when the Haj Committee facilitates the
Haj pilgrims by making arrangements for their visit to the
E Kingdom of Saudi Arabia for undertaking the Haj pilgrimage,
there is a complete absence of profit motive. On the contrary,
the money received by the Haj Committee from the Haj pilgrims
goes to the statutory fund, which in turn, has to be used inter alia
for the benefit of Haj pilgrims. Even the budget of the Haj
Committee is required to be submitted to the Central
F
Government. Thus, the Central Government has all pervasive
control over the Haj Committee. The State Governments have
the same control over the State Committee. On the other hand,
there are no onerous duties attached to HGOs. They earn profit
by rendering service to Haj pilgrims. Except for the stringent
G conditions for the registration, the Government has no control
over HGOs.[Para 58][141-B-D; 142-A-C]
1.13 The Haj Committee is a statutory committee which is
entrusted with various functions for the welfare of Haj pilgrims.
Moreover, the profit motive is completely absent in the case of
H the Haj Committee. The money received by the Haj Committee
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from the pilgrims for rendering service goes to a statutory fund A
created under the 2002 Act which is to be used only for the
purposes specified in the 2002 Act. That is the reason why the
Haj Committee constitutes a class in itself when it comes to
rendering service to Haj pilgrims. It is a separate class as
distinguished from HGOs. There is an intelligible differentia for
B
this classification. The object of exemption in paragraph 5A of
the Mega Exemption Notification is to promote the activity of
the specified organisations of rendering service for the religious
pilgrimage. Both the organisations which are specified in the
notification are statutory organisations over which the
Government has an effective control. Moreover, the service C
rendered by the specified organisations to the devotees is not
with the object of making profit. Therefore, there is a nexus
between the classification made and the object sought to be
achieved by granting exemptions.[Para 60][143-H; 144-A-D]
1.14 In the meeting of the Fitment Committee, there were D
deliberations on the representation made by the petitioners. The
decision/recommendation of the Fitment Committee contains valid
reasons for making a distinction between HGOs and Haj
Committees. [Para 62][144-F-G]
1.15 In the matter of grant of exemptions in tax matters, E
latitude has to be 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 specified organisations as a class and keeping
out the Private Tour Operators from exemption under Clause
5A. Judicial self-restraint is shown in this case.[Para 64][150-B]
F
1.16 The arguments based on discrimination have no
substance at all, as HGOs and the Haj Committees do not stand
on par and in fact, the Haj Committees constitute a separate class
by themselves, which is based on a rational classification which
has a nexus with the object sought to be achieved. Therefore,
there is no merit in the challenge in the petitions. [Paras 65 and G
65][150-C-D]
Union of India & Ors. v. Rafique Shiekh Bhikan and
Anr. (2012) 6 SCC 265; Federation Haj PTOs of India
v. Union of India (2019) 2 SCALE 460: [2019] 2 SCR
H
102 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 627; Government of Kerala & Anr. v. Mother Superior
Adoration Convent (2021) 5 SCC 602; Cox & Kings
India Ltd. v. Commissioner of Service Tax, New Delhi
2014 (35) S.T.R. 817; Rustom Cavasjee Cooper v.
Union of India (1970) 1 SCC 248 : [1970] 3 SCR 530;
In Re the Special Courts Bill 1978 (1979) 1 SCC 380 :
B
[1979] 2 SCR 476; Kunnathat Thatehunni Moopil Nair,
etc. v. State of Kerala &Anr. 1961 AIR 552 : [1961] 3
SCR 77; East India Tobacco Company, etc. v. State of
Andhra Pradesh &Anr. 1962 AIR 1733 : [1963] 1 SCR
404; Vivian Joseph Ferriera & Anr. v. Municipal
C Corporation of Greater Bombay & Ors. 1972 (1) SCC
70 : [1972] 2 SCR 257; Jaipur Hosiery Mills (P) Ltd.,
Jaipur v. State of Rajasthan &Ors. (1970) 2 SCC 26 :
[1971] 1 SCR 396; M. Jhangir Bhatusha & Ors. v.
Union of India & Ors. (1989) Suppl. 2 SCC 201 : [1989]
3 SCR 356; Bharat Surfactants (Private) Ltd. &Anr. v.
D
Union of India & Anr. (1989) 4 SCC 21: [1989] 3 SCR
367; P.M. Ashwathanarayana Setty & Ors. v. State of
Karnataka &Ors. (1989) Suppl. 1 SCC 696 : [1988] 3
SCR Supl. 155; Sanghvi Jeevraj Ghewar Chand &Ors.
v. Secretary, Madras Chillies Grains & Kirana
E Merchants Workers Union & Anr. AIR 1969 SC 530 :
[1969] 1 SCR 1 366; Bangalore Water Supply &
Sewerage Board v. Workmen of Bangalore Water Supply
& Sewerage Board & Ors. 1994 (2) LLN 1239; Union
of India &Ors. v. Bengal Shrachi Housing Development
Ltd. and Anr. (2018) 1 SCC 311 : [2017] 14 SCR 347;
F
R.C. Jall v. Union of India (1962) AIR 1281 : [1962] 3
Suppl. SCR 436; Commissioner of Customs (Import)
Mumbai v. Dilip Kumar and Company and Ors. (2018)
9 SCC 1 : [2018] 7 SCR 1191; Commissioner of
Customs (Preventive) Mumbai v. M. Ambalal and
G Company (2011) 2 SCC 74 : [2010] 15 SCR 937; Quinn
v. Leathem, 1901 AC 495 (HL); State of Orissa v.
Sudhansu Sekhar Misra AIR 1968 SC 647 : [1968] 2
SCR 154; R.K. Garg v. Union of India (1981) 4 SCC
675 : [1981] 1 SCR 947; Sun Export Corpn. v. Collector
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ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 103
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of Customs, (1997) 6 SCC 564 : [1997] 1 Suppl. SCR A
434; All–India Federation of Tax Practitioners & Ors.
v. Union of India & Ors. (2007) 7 SCC 527: [2007] 9
SCR 147; Atlas Tours and Travels Pvt. Ltd. v.
Commissioner of Service Tax, Mumbai 2015-TIOL-306-
CESTAT-MUM; S. K. Dutta, Income Tax Officer v.
B
Lawrence Singh Ingty (1968) AIR 658 : [1968] 2 SCR
165- referred to.
Morey v. Doud [351 US 457 : 1 L Ed 2d 1485 (1957)-
referred to.
Case Law Reference C
[2019] 2 SCR 627 referred to Para 9
[1970] 3 SCR 530 referred to Para 21
[1979] 2 SCR 476 referred to Para 21
[1961] 3 SCR 77 referred to Para 21 D
[1963] 1 SCR 404 referred to Para 21
[1972] 2 SCR 257 referred to Para 21
[1971] 1 SCR 396 referred to Para 21
[1989] 3 SCR 356 referred to Para 29 E

[1989] 3 SCR 367 referred to Para 29
[1988] 3 SCR Supl. 155 referred to Para 29
[1969] 1 SCR 1 366 referred to Para 29
F
[2017] 14 SCR 347 referred to Para 30
[1962] 3 Suppl. SCR 436 referred to Para 30
[2018] 7 SCR 1191 referred to Para 48
[1968] 2 SCR 154 referred to Para 49
G
[2010] 15 SCR 937 referred to Para 49
[1981] 1 SCR 947 referred to Para 62
CIVIL ORIGINAL JURISDICTION : Writ petition (c) no.755 of
2020
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104 SUPREME COURT REPORTS [2022] 17 S.C.R.

A (Under Article 32 Of The Constitution of India)
With
Writ petition (c) nos.781, 907, 772, 882, 809, 940, 855, 977, 856,
860, 896, 989, 1034, 1014, 1329 and 1431 of 2020
B Arvind P. Datar, Gopal Sankaranarayanan, Sr. Advs., Durai Raj,
Kotal Harshavardhan, Ms. Rashmi Nandakumar, Rahul Unnikrishnan,
Kshitij Maheshwari, Ms. Aishwary Jain, Y. Arunagiri, Ms. Naveena,
Ms. Tanya Srivastava, Shankar Narayanan, Harish Beeran, Mushtaq
Salim, Usman Ghani Khan, Azhar Assees, Ms. Pallavi Pratap, Sayid
Marzook Bafaki, Faisal M. Aboobacker, Zulfiker Ali P. S., Rajat
C Bhardwaj, P. Soma Sundaram, Rohit Amit Sthalekar, Advs. for the
Petitioner.
N. Venkataraman, ASG, Ms. Shraddha Deshmukh, Ms. Sonia
Mathur, Ms. Aakansha Kaul, V. Chandra Shekhar B., H. R. Rao, Durga
Dutt, Amith J., Ashok Kumar, Manek Singh, Aman Sahani, Amrish Kumar,
D Mukesh Kumar Maroria, Advs. for the Respondents.
The Judgment of the Court was delivered by
ABHAY S. OKA, J.
1. The broad question involved in this group of writ petitions is
E about the liability of Haj Group Organizers (HGOs) or Private Tour
Operators (PTOs) to pay service tax on the service rendered by them to
Haj pilgrims for the Haj pilgrimage.
FACTUAL ASPECTS
2. The Haj pilgrimage is undertaken by thousands of pilgrims from
F India, either through the Haj Committee of India (for short, ‘the Haj
Committee’) or HGOs. There is a bilateral treaty between India and the
Kingdom of Saudi Arabia. As per the said bilateral arrangement, the Haj
pilgrimage can be undertaken from India only through the Haj Committee
or HGOs.
G 3. The service tax regime was introduced in India in the year
1994 under the provisions of the Finance Act, 1994 (for short ‘the Finance
Act’). Initially, very few services were made subject to payment of
service tax. However, by subsequent Finance Acts, a large number of
services were added to the list from time to time. The total number of
H services subjected to service tax exceeded 100. A negative list regime
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was introduced by Act No.23 of 2012 with effect from 1st July 2012. By A
Act No.23 of 2012, Sections 66-B and 66-C were added. Section 66-B
is the charging Section which provided that there shall be a levy of service
tax at the rate of 12% on the value of all services other than those
specified in the negative list. By amending Section 66-B, the percentage
of service tax was enhanced to 14%. Section 66-C confers power on
B
the Central Government to frame rules for determining the place where
such services are provided or deemed to have been provided or agreed
to be provided or deemed to have been agreed to be provided.
Accordingly, the Place of Provision of Services Rules, 2012 (for short,
‘the 2012 Rules’) were framed which came into force with effect from
1st July 2012. On 20th June 2012, Mega Exemption Notification no.25 of C
2012–ST (for short, ‘the Mega Exemption Notification’) was issued
containing several exemptions. Paragraph 5(b) of the Mega Exemption
Notification provided for the exemption on services by a person by way
of conduct of any religious ceremony. Paragraph 5A of the Mega
Exemption Notification provided for the exemption to services by
D
specified organisations in respect of a religious pilgrimage facilitated by
the Ministry of External Affairs of the Government of India, under bilateral
arrangement. The Mega Exemption Notification defines specified
organisations as Kumaon Mandal Vikas Nigam Limited, a Government
of Uttarakhand Undertaking and the Committee or State Committee as
defined in Section 2 of the Haj Committee Act, 2002 (for short, ‘the E
2002 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 exemption
notification dated 28th June 2017 (for short, ‘the IGST Exemption
Notification’) was issued by exercising the powers under the IGST Act.
F
Identical Exemption Notification was also issued on the same date (for
short, ‘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 to
challenge the levy of service tax on the service regarding the Haj
pilgrimage. By the order dated 11th December 2019 passed in Writ Petition G
(C) No.977 of 2014, this Court directed the petitioners to make a
representation to the Government of India for grant of exemption from
service tax. Accordingly, a detailed representation was made by some
of the petitioners on 19th December 2019. The GST Council by the order
dated 14th March 2020, rejected the representation on the basis of the H
106 SUPREME COURT REPORTS [2022] 17 S.C.R.

A recommendation of the Fitment Committee. The said decision was
communicated by the Government of India by a letter dated 5th May
2020.
5. Most of the writ petitions in the current batch of petitions have
been filed by various organisations representing HGOs/PTOs. Only one
B petition, i.e. Writ Petition (C) No.1329 of 2020, has been filed by an
individual petitioner who desires to undertake the Haj pilgrimage. Most
of the petitions challenge the aforesaid orders rejecting representations.
In some of the petitions, a declaration has been claimed that the provisions
of the laws relating to service tax are not applicable to services rendered
by HGOs and PTOs to Hajis for performing the religious activity of Haj/
C Umrah. In some of the petitions, there is a challenge to the validity of
Rules 8 and 14 of the 2012 Rules. However, submissions have not been
canvassed on the issue of validity.
6. Counter Affidavits have been filed in Writ Petition (C) Nos.755,
856 and 896 of 2020, which have been treated as common affidavits in
D this group of petitions.
7. At this stage, we may note here that in this batch of petitions,
we are not dealing with the issue of extra-territorial operation of the
service tax regime, as the said issue is pending for adjudication before
another Bench.
E
SUBMISSIONS OF THE PETITIONER
8. Shri Arvind P. Datar, the learned senior counsel, has made
detailed submissions in support of the writ petitions. His first submission
is based on the Mega Exemption Notification. He pointed out that
F paragraph 5(b) of the said notification grants exemption to the services
provided by persons by way of conduct of any religious ceremony.
Secondly, he pointed out that under paragraph 5A, an exemption has
been granted to the services rendered by specified organisations in
respect of a religious pilgrimage, facilitated by the Ministry of External
Affairs of the Government of India under bilateral arrangement. He
G pointed out that paragraphs 14 and 63 of the IGST Exemption Notification
use similar language. He also pointed out that two pilgrimages covered
under the existing bilateral arrangements are Kailash Manasarovar Yatra
and the Haj Pilgrimage. He also pointed out the definitions of specified
organisations in both the notifications, which in relation to Haj pilgrimage
means the Committee or State Committees as defined under Section 2
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of the 2002 Act. He pointed out that service tax is an indirect tax, the A
burden of which is ultimately borne by the Haj pilgrims. He also pointed
out that the said Act of 2002 defines a ‘pilgrim’. It means a muslim
proceeding to, or returning from, Haj. He also pointed out the details of
the journey undertaken by a Haj pilgrim right from his arrival in Mecca
and the duties of Haj pilgrims. He submitted that under paragraph 5(b)
B
of the Exemption Notifications, service by persons by way of conduct of
any religious ceremony is exempted. He pointed out that there is no
dispute that the religious ceremony in paragraph 5(b) will include the
Haj ceremony. He submitted that a wrong interpretation is sought to be
given to paragraph 5(b) by the Revenue by contending that it applies
only to the service provider who himself performs the religious ceremony C
and, therefore, the exemption will not apply to HGOs/PTOs, as they
themselves do not perform Haj ceremony. He submitted that the burden
of service tax passes on to Haj pilgrims; therefore, the object of granting
exemption under the service tax or IGST is to reduce the financial burden
on the Haj pilgrims.
D
9. The learned senior counsel pointed out that earlier, the object
of helping poor Muslims to perform the Haj ceremony was sought to be
achieved by granting Haj subsidy. However, this Court, in the case of
Union of India & Ors. v. Rafique Shiekh Bhikan and Anr.1 held that
grant of such a subsidy is contrary to the tenets of Islam as the tenets of
Islam require the Haj pilgrims to perform the Haj ceremony with their E
own funds after discharging their debts and after making a provision for
the benefit of their families. The learned senior counsel also relied upon
a decision of this Court dated 4th February 2019 in Writ Petition (C)
No.4 of 2019 (Federation Haj PTOs of India v. Union of India). He
pointed out that the role played by the HGOs and PTOs is unique, which F
is recognized in both the above decisions. He pointed out that the said
decisions note that HGOs/PTOs act as tour operators for pilgrims, provide
a complete package right from the start of the journey from various
places in India to Saudi Arabia, their arrangements for stay in Saudi
Arabia, the performance of Haj Ceremony and safe return to India. He
pointed out that the majority of Haj pilgrims are taken care of by the Haj G
Committee, and only a limited number of pilgrims can undertake Haj
pilgrimage through HGOs/PTOs. He pointed out that the cost of the
package provided by HGOs/PTOs consists of airfare from India to Saudi
Arabia. He also pointed out the importance of the Haj and the details of
1
2012 (6) SCC 265 H
108 SUPREME COURT REPORTS [2022] 17 S.C.R.

A the pilgrimage. He pointed out that the pilgrimage performed after Ramzan
is called Haj, and the pilgrimage performed at different times is called
Umrah. Relying upon the decision of this Court in the case of Rafique
Shiekh Bhikan1, he pointed out that the five-day program of the Haj
ceremony is extremely a rigid procedure which is to be scrupulously
followed in a rigid manner and as per a time-bound schedule. He pointed
B
out that the pilgrim loses Haj if the strict procedure and time schedule
are not followed.
10. The learned senior counsel pointed out that many persons/
agencies are involved in the Haj religious ceremony, such as the Ministry
of Haj Affairs of the Kingdom of Saudi Arabia, the Ministry of Minority
C Affairs of the Government of India, Tawafa Establishments, Maollims,
approved HGOs and lastly Haj pilgrims themselves. He would, therefore,
submit that the service by a person by way of religious ceremony
mentioned in the Exemption Notification has to be properly interpreted
to mean that the word ‘person’ will also include persons enumerated
D above, including Haj pilgrims. He pointed out that all Haj pilgrims are
required to register themselves with Tawafa Establishments. He pointed
out that HGOs arrange for the aeroplane booking and money exchanges
on which service tax/ GST is duly paid. Though HGOs arrange for the
stay of Haj pilgrims in Saudi Arabia, as soon as they land in Saudi Arabia,
their entire movement is controlled by Tawafa Establishments. Maollims,
E who are the agents of the Tawafa Establishments, control their movement.
He submitted that the Exemption Notification would apply for the conduct
of the Haj ceremony except for air travel and foreign exchange services.
His submission is that the residual amount is a consideration for the
services for conduct of the Haj ceremony and therefore, the said amount
F is exempted from payment of service tax / IGST. That is how, under
paragraph 5(b) of the Mega Exemption Notification and corresponding
paragraph 14A of the IGST Exemption Notification, the HGOs are entitled
to exemption on the aforesaid residual amount.
11. He submitted that the beneficial object of the Exemption
G Notification must be given full effect. He submitted that beneficial
exemptions differ from exemptions generally granted in tax statutes. On
this aspect, he relied upon this Court’s decision in the case of
Government of Kerala & Anr. v. Mother Superior Adoration
Convent2.
2
H 2021 (5) SCC 602
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12. His next limb of argument is based on a violation of Article 14 A
of the Constitution of India. He pointed out that under paragraph 5A of
the Mega Exemption Notification and paragraph 63 of IGST Exemption
Notification, the services rendered by specified organisations such as
Haj Committees for Haj pilgrimage are wholly exempted. He submitted
that the provision of granting exemption from service tax/GST only to
B
Haj pilgrimage organised by the Haj Committees will not stand the test
of Article 14 of the Constitution of India. He pointed out that usually, a
bilateral agreement between the Government of India and the Kingdom
of Saudi Arabia is executed every year. A specific quota of Haj pilgrims
is assigned by the Kingdom of Saudi Arabia under the bilateral agreement.
Out of the said quota, normally 70% is allotted to Haj Committee, and C
30% is allotted to approved HGOs. The selection through Haj Committee
is done through a lottery system. He pointed out that there is no difference
between the service provided by the Haj Committees and the service
provided by HGOs to Haj pilgrims. He pointed out that the exemption
granted under paragraph 5A is not applied to airfare and foreign exchange
D
conversion services. He submitted that when the Haj ceremony is identical,
the act of granting exemption to those Haj pilgrims who perform Haj
ceremony through the Haj Committee but denying the exemption to Haj
pilgrims who perform Haj ceremony through HGOs, is discriminatory.
13. The learned senior counsel also pointed out that both the
categories of Haj pilgrims, on reaching the Kingdom of Saudi Arabia, E
are monitored by Tawafa Establishments. He submitted that the Revenue
cannot rely upon Section 9 of the 2002 Act for supporting the illegal
classification made as aforesaid, as the obligation cast upon the Haj
Committees by certain clauses of Section 9 are also obligations of
recognised HGOs. He submitted that no distinction could be made F
between the Haj Committee and HGOs on the ground that the Haj
Committee is an agency and instrumentality of the State. The reason is
that the Government retains some control of HGOs.
14. He submitted that the provisions of the 2012 Rules are not in
conformity with the statutory provisions. He invited our attention to Rules G
2 and 3 of the 2012 Rules. He submitted that for the Haj pilgrimage, the
location of the service recipient will always be the Kingdom of Saudi
Arabia, as the physical presence of the pilgrim is required for the conduct
of the religious ceremony. He submitted that the emphasis is on the
service provider’s location and the service recipient’s location. He
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110 SUPREME COURT REPORTS [2022] 17 S.C.R.

A submitted that the location of the service recipient will have to be the
place where the service is rendered. He submitted that the Revenue is
erroneously trying to equate the residence of both the service provider
and the service recipient as their respective locations in India. He also
invited our attention to Rule 8 of the 2012 Rules. He submitted that the
location of the service recipient in case of Haj pilgrimage is and will
B
always be the Kingdom of Saudi Arabia as per Rule 2 of the 2012 Rules.
The learned senior counsel relied on this Court’s decision in the case of
All–India Federation of Tax Practitioners & Ors. v. Union of India
& Ors3. By relying upon the said decision, he submitted that service tax
is not a charge on the business and, therefore, it is leviable only on services
C provided within the country.
15. He relied upon a decision of CESTAT in the case of Cox &
Kings India Ltd. v. Commissioner of Service Tax, New Delhi4. He
submitted that CESTAT has held that the outbound tours abroad are not
liable to levy of service tax. He pointed out that the same view is taken
D by CESTAT in the case of Atlas Tours and Travels Pvt. Ltd. v.
Commissioner of Service Tax, Mumbai5. He pointed out that this Court
upheld the said decision.
16. The learned senior counsel submitted that even if it is assumed
that Haj is not a religious ceremony but is an event, Rule 6 of the 2012
E Rules will apply, which deals with the place of provision of services
relating to events. He urged that if the location of the service recipient is
outside the taxable territory, service tax cannot be levied. He also invited
our attention to provisions of the GST Act and IGST Act, particularly
Sections 12 and 13 of the IGST Act. He urged that the said provisions of
the IGST Act are pari materia with the 2012 Rules. Relying upon Article
F 286(1)(b) of the Constitution of India, he submitted that the said provision
prohibits the State from imposing GST on the import of goods and services
outside the territory of India; therefore, the IGST Act/GST Act will not
apply to Haj pilgrimage. He would, therefore, submit that the decision
made on the representation of some of the HGOs is erroneous.
G 17. Shri Gopal Sankarnarayanan, the learned senior counsel
appearing for some of the petitioners, pointed out that the Haj pilgrimage
undertaken by thousands of the Haj pilgrims either through Haj
3
2007 (7) SCC 527
4
2014 (35) S.T.R. 817
5
H 2015-TIOL-306-CESTAT-MUM
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Committees or through HGOs, is identical, and there is no difference A
between them. The reason is that the 2002 Act defines ‘pilgrim’ under
Section 2(f) as a Muslim proceeding to, or returning from, Haj. He
submitted that no Indian pilgrim can undertake Haj pilgrimage without
following the mandate set out under the bilateral arrangement between
the two countries. Therefore, such pilgrimage will be only through either
the Haj Committee or HGOs. He submitted that the Revenue has B
accepted that the Haj Committee, as well as HGOs, render the same
services to the Haj pilgrims. He relied upon a chart appended to the
written submissions, which shows that the services offered along with
the prices charged by the Haj Committee and HGOs are virtually the
same. The difference in the prices is because the Haj Committee offers C
accommodation without the facility of catering at a place far away from
Kabah, whereas, HGOs offer accommodation with catering for five to
ten days at a location near Kabah.
18. In support of his submissions based on the violation of Article
14 of the Constitution of India, he urged that the Haj Committee cannot
D
constitute a class by itself only because it is recognised as a specified
organisation under various provisions and Exemption Notifications. He
submitted that HGOs are identically placed as Haj Committees in all
respects. The learned senior counsel relied upon a decision of this Court
in the case of S. K. Dutta, Income Tax Officer v. Lawrence Singh
Ingty6. He pointed out that this Court dealt with a case where certain E
exemptions under the Income Tax Act, 1922 were denied to government
servants belonging to Scheduled Tribe. He submitted that this Court
rejected the contention of the government that the distinction sought to
be made between the government servants belonging to Scheduled Tribes
and others belonging to the Scheduled Tribes is not imaginary and has
been made on rational basis. He pointed out that this Court held that F
when tax law operates unequally and which cannot be justified on the
basis of any reasonable classification, the law would violate Article 14
of the Constitution.
19. He submitted that the Revenue cannot make such discrimination
on the pretext that HGOs operate with a profit motive. He submitted G
that the said contention has already been negatived by this Court in
paragraph 11 and 12 in the case of Rafique Sheikh Bhikan1.
20. The learned senior counsel, further, submitted that only those
who are not selected in the lottery drawn by the Haj Committee, have to
6
1968 (2) SCR 165 H
112 SUPREME COURT REPORTS [2022] 17 S.C.R.

A go to HGOs. Therefore, the act of imposing service tax on those who
are compelled to go through HGOs, is highly discriminatory.
21. He invited our attention to the recommendation of the Fitment
Committee placed before the GST Council meeting held on 14th March
2020. The first reason set out therein is that if the exemption is allowed
B for religious pilgrimage, many other domestic and international tours can
be considered as religious pilgrimages. Secondly, all religious pilgrimage
tours are made taxable except for those which are organized by the
Government of India as per the bilateral arrangement. He submitted
that this distinction drawn by the Fitment Committee is completely
erroneous. He submitted that in a case like this, it is not enough for the
C State to justify the object of the State Act but also the effect of the law.
He placed reliance on a decision of this Court in the case of Rustom
Cavasjee Cooper v. Union of India7. He relied upon various decisions
of the Apex Court i.e. In Re the Special Courts Bill 19788, Kunnathat
Thatehunni Moopil Nair, etc. v. State of Kerala & Anr.9, East India
D Tobacco Company, etc. v. State of Andhra Pradesh & Anr.10, Vivian
Joseph Ferriera & Anr. v. Municipal Corporation of Greater
Bombay & Ors.11 and Jaipur Hosiery Mills (P) Ltd., Jaipur v. State
of Rajasthan & Ors12. He submitted that the onus which was required
to be discharged by the Revenue has not been discharged in the present
case.
E
22. The learned senior counsel appearing for the petitioner in Writ
Petition (C) No.1329 of 2020 pointed out that the petitioner is a prospective
pilgrim for Haj. He submitted that apart from violation of Article 14 of
the Constitution of India, the action of the Government of India to charge
service tax and GST on HGOs, amounts to a violation of rights guaranteed
F under Article 25 of the Constitution of India. His submissions made on
the issue of discrimination are the same as made by the learned senior
counsel appearing for the petitioners in other petitions.
23. The learned counsel for the petitioner in Writ Petition (C) No.
772 of 2020 pointed out that the service provided by the HGOs is far
G
7
1970 (1) SCC 248
8
1979 (1) SCC 380
9
1961 (3) SCR 77
10
1963 (1) SCR 404
11
1972 (1) SCC 70
12
H 1970 (2) SCC 26
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better than those provided in by the Haj Committees. Apart from relying A
upon the decision of this Court in the case of All–India Federation of
Tax Practitioners & Ors.3, he relied upon the decisions of High Courts/
Tribunals in support of the proposition that as the service rendered by
the HGOs to Haj pilgrims being outside taxable territory, the same is not
taxable for service tax.
B
SUBMISSIONS OF THE REVENUE
24. At the outset, Shri N. Venkatraman, the learned Additional
Solicitor General of India pointed out that the issue of extra-territorial
application of service tax laws raised by the petitioners cannot be gone
into as it is the subject matter of challenge in other cases pending before C
another Bench.
25. The learned ASG pointed out the nature of the regime
governing service tax prior to 1st July 2012. Thereafter, he invited our
attention to the law as applicable for the period between 1st July 2012
and 30th June 2017. He pointed out the relevant provisions of the 2012 D
Rules. He invited our attention to Rule 2(h) and submitted that as far as
HGOs/PTOs are concerned, they are located within India. Relying upon
the definition of ‘location of service recipient’ in Rule 2(i), he submitted
that by virtue of sub-clause (iv) of clause (b) thereof, in the case of the
service recipient who is an individual Haj pilgrim, his location will be in
India. He pointed out that the decisions of CESTAT relied upon by the E
petitioners, are for the period prior to 1st July 2012, when earlier service
tax regime was in existence. He submitted that as service rendered to
Haj pilgrims is not a part of the negative list under Section 66-B of the
Finance Act, 1994, it is taxable from 1st July 2012.
26. For the period from 1st July 2017 onwards, he relied upon F
Section 12(2) of the IGST, which defines ‘the place of supply of services’
and Section 12(9), which defines ‘the place of supply of passenger
transportation service’. He submitted that if both the service provider
and service recipient are within India, the transaction becomes taxable.
He submitted that the contract of service in these cases is entered into
G
in India and the consideration is paid to HGOs/PTOs in Indian currency.
He submitted that various services consumed by Haj pilgrims as a part
of their pilgrimage outside India, are all a bundle of services contracted
with HGOs/PTOs in India and the consideration is paid for the services
in India. HGOs/PTOs may, thereafter, be entering into separate
engagements with the service providers outside India, from whom Haj H
114 SUPREME COURT REPORTS [2022] 17 S.C.R.

A pilgrims get services. The contracts entered into by HGOs/PTOs with
service providers outside India, are not the contracts with the Haj pilgrims.
He submitted that in this group of petitions, none of the statutory
provisions has been challenged.
27. He urged that conducting tours for Haj pilgrims is a commercial
B activity undertaken by HGOs/PTOs and the said activity is not a religious
ceremony, for which exemption has been provided in the exemption
notification. The learned ASG submitted that tour operators who conduct
religious pilgrimages of various religions, both within and outside India,
are taxed under the IGST Act. He gave examples of Char Dham Yatra,
Visits to Buddhist Temples in Nepal and Japan, etc.
C 28. Dealing with the arguments based on paragraph 5(b) of the
Mega Exemption Notification, he submitted that the said provision will
apply when the service is rendered by a person by way of conduct of
any religious ceremony. He submitted that HGOs/PTOs arrange for
travel, accommodation and other facilities in Saudi Arabia to enable Haj
D pilgrims to undertake the pilgrimage. They do not conduct any religious
ceremony. The learned ASG also pointed out paragraph 5A, under which
an exemption has been granted not to service by way of a religious
ceremony, but to services by specified organizations in respect of a religious
pilgrimage facilitated by the Ministry of External Affairs under the bilateral
arrangement. He pointed out the use of the expression ‘religious
E ceremony’ in contrast to the choice of the expression ‘in respect of
religious pilgrimage’. He submitted that in the present case, the exemption
claimed is to services by a person by way of conduct of any religious
ceremony. There is no exemption granted to services rendered by HGOs
of arranging travel, accommodation and other facilities to enable Haj
F pilgrims to undertake the Haj pilgrimage. The exemption is to the services
rendered only by specified organisations for facilitating religious
pilgrimage.
29. While dealing with the argument of violation of Article 14 of
the Constitution of India, he submitted that the classification of pilgrims
undertaking Haj pilgrimage through the Haj Committee under the bilateral
G
arrangement and those undertaking tours through PTOs is based on an
intelligible differentia having rational nexus to the object sought to be
achieved by the Statute. He pointed out that service tax exemption granted
to the services provided by the specified organisations in respect of
religious pilgrimage facilitated by the Government of India under the
H bilateral arrangement is not discriminatory. He submitted that Haj
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Committee constitutes a class by itself, which cannot be treated on the A
same footing as HGOs/PTOs, though services rendered by all of them
may be similar. He pointed out that Haj Committee was constituted under
Section 3 of the Act of 2002 and State Haj Committees were constituted
under Section 17. In view of sub-Section (2) of Section 3, the Haj
Committee is a body corporate having perpetual succession and a
B
common seal. Various statutory duties are imposed on Haj Committee
by Section 9. There is an obligation to take approval to the budget
estimates from the Central Government. He submitted that different
classes of persons doing the same activity could be treated differently
and not alike. He relied upon decisions of this Court in the cases of M.
Jhangir Bhatusha & Ors. v. Union of India & Ors. 13, Bharat C
Surfactants (Private) Ltd. & Anr. v. Union of India & Anr.14, P.M.
Ashwathanarayana Setty & Ors. v. State of Karnataka & Ors.15,
Sanghvi Jeevraj Ghewar Chand & Ors. v. Secretary, Madras Chillies
Grains & Kirana Merchants Workers Union & Anr.16 and Bangalore
Water Supply & Sewerage Board v. Workmen of Bangalore Water
D
Supply & Sewerage Board & Ors17.
30. He also submitted that service tax is an indirect tax; therefore,
the said tax can be passed on by the service provider to the service
recipient. He pointed out that being a tax on service, it is not a direct tax
on the service provider, but is a value added tax in the nature of
consumption tax on the activity done by way of service. He relied on E
this Court’s decision in the case of Union of India & Ors. v. Bengal
Shrachi Housing Development Ltd. and Anr.18 and R.C. Jall v. Union
of India19. He submitted that the classification test has to be applied
with reference to service providers, namely Haj Committee and HGOs/
PTOs, and not with reference to the recipients of the service. In short, F
he submitted that Haj Committee and HGOs/PTOs belong to different
classes.
31. Reverting to the 2012 Rules, he submitted that if two competing
rules appear to cover the transaction, then the tie-breaker provided in

13
G
1989 Suppl. (2) SCC 201
14
1989 (4) SCC 21
15
1989 Suppl. (1) SCC 696
16
AIR 1969 SC 530
17
1994 (2) LLN 1239
18
2018 (1) SCC 311
19
1962 Suppl. (3) SCR 436 H
116 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Rule 14 comes into the picture, which lays down that the determination
must be in accordance with the Rule that occurs later among the rules
that merit consideration. He would, therefore, submit that Rule 8 will
apply, which makes the service taxable. As regards IGST Act, he
submitted that when Section 12 is applicable, the applicability of Section
13 stands completely excluded and therefore, clause (b) of sub-Section
B
(3) of Section 13 will have no application.
REJOINDER BY THE PETITIONERS
32. In rejoinder, Shri Arvind P. Datar, Senior Advocate submitted
that in the present case, Rule 8 will have no application at all. The learned
C senior counsel submitted that the test of purposive interpretation laid
down by this Court in the case of Government of Kerala & Anr. v.
Mother Superior Adoration Convent2 will have to be applied. While
interpreting the exemption provision, he submitted that the decisions relied
upon 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 a
D case where this Court upheld different treatment given to the State Trading
Corporation and private importers. He submitted that the differential
exemptions were granted after the Government was satisfied that it
was necessary in the public interest to pass a special exemption order
considering the exceptional circumstances set out therein.
E CONSIDERATION OF SUBMISSIONS
33. The service tax was introduced by way of the Finance Act.
The Finance Act incorporated various services which were made subject
to payment of service tax. The services were enumerated in clause 105
of Section 65 of the Finance Act.
F
34. Service tax is an indirect tax which is leviable on the service
provider who is the taxable person. The service tax is a tax on service
rendered. It is not a direct tax on service provider but a value-added tax
on the activity by way of service. The service provider can pass on the
burden of payment of service tax to the service recipient. In this group
G of petitions, we are concerned with the negative service tax regime,
which was introduced with effect from 1st of July 2012 by incorporation
of Sections 66B and 66C by the Finance Act, 2012. When this regime
was introduced with effect from 1st July 2012, more than 100 specific
services were incorporated in Clause 105 of Section 65 of the Finance
Act. Section 66B introduced a negative service tax regime by providing
H
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that tax shall be levied on the value of all services other than those A
specified in the negative list. Section 66B is the charging Section. For
the sake of convenience, we are reproducing Section 66B which reads
thus:
“SECTION 66B. Charge of service tax on and after
Finance Act, 2012.— There shall be levied a tax (hereinafter B
referred to as the service tax) at the rate of fourteen percent
on the value of all services, other than those services
specified in the negative list, provided or agreed to be
provided in the taxable territory by one person to another
and collected in such manner as may be prescribed.”
C
(emphasis added)
35. Thus, the service tax is payable on all services other than
those specified in the negative list provided or agreed to be provided in
the taxable territory by one person to another. The taxable territory is
defined in Clause 52 of Section 65B of the Finance Act to mean the D
territory to which the provisions of the relevant Chapter ‘SERVICE
TAX – STATUTORY PROVISIONS’ containing Sections 64 to 114 of
the Finance Act apply. Sub-section (1) of Section 64 of the Finance Act
provides that the relevant Chapter extends to the whole of India except
the State of Jammu and Kashmir. Under the negative list regime which
operated till 30th June, 2017, service tax was payable on services provided E
or agreed to be provided in the taxable territory which is the whole of
India except Jammu and Kashmir. Section 66C confers rule-making
power on the Central Government for determination of the place where
such services are provided or deemed to have been provided or agreed
to be provided or deemed to have been agreed to be provided. By F
exercising the power under Section 66C of the Finance Act, the 2012
Rules were enacted and were brought into force with effect from 1st
July 2012.
36. In these petitions, we are concerned with HGOs or PTOs. It
is, therefore, necessary to understand the nature of services provided by G
HGOs/ PTOs. Haj pilgrimage is a five-day religious pilgrimage to Mecca
and nearby Holy places in Saudi Arabia. As per the Holy Quran, all
Muslims who are physically and financially sound must perform the Haj
pilgrimage 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 takes
place only once a year in the twelfth and final month of Islamic lunar H
118 SUPREME COURT REPORTS [2022] 17 S.C.R.

A calendar. Pilgrimage undertaken to Mecca at other times is known as
Umrah. During the five days of Haj, the pilgrims are required to perform
a series of rituals, the details of which are not relevant for deciding the
issues involved in these petitions.
37. To enable Haj pilgrims of India to undertake Haj pilgrimage,
B there is a bilateral agreement executed every year between the Kingdom
of Saudi Arabia and the Government of India. As per the bilateral
agreement, a quota of number of pilgrims is assigned to India. Out of the
said quota, normally only 30% is allocated to HGOs. The rest of the
quota is made available to the Haj Committee.
C 38. HGOs render services to Haj pilgrims by purchasing flight
tickets, arranging and making payments for accommodation in Saudi
Arabia, arranging and making available food during their stay in Saudi
Arabia, arranging and making payments for transportation in Saudi Arabia
and providing foreign exchange in the form of Saudi Riyals. As stated in
the written submissions filed by Shri Arvind P. Datar, the learned senior
D counsel, all Muslim devotees who wish to undertake the Haj pilgrimage
have to register themselves with Tawafa establishment in Saudi Arabia.
As soon as Haj pilgrims land in Kingdom of Saudi Arabia, their entire
movement is controlled by Tawafa establishment and its agents known
as Maollims. Similar kinds of services are provided by Haj Committee to
E those pilgrims who undertake Haj pilgrimage through Haj Committee.
As pointed out by Shri Gopal Sankaranarayanan, the learned senior
counsel, HGOs provide better accommodation at a place near Kabah
and also arrange for food. However, the Haj Committee provides
accommodation at far away places without the facility of catering. The
2012 Rules have a direct connection with liability to pay service tax as
F the said Rules decide the place of provision of a service. Apart from the
definitions of ‘location of the service provider’ and ‘location of the service
receiver’ under Clauses (h) and (i) of Rule 2, Rules 3, 4, 7, 8 and Rule 9
of 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:
G “2(h)”location of the service provider” means- (a) where
the service provider has obtained a single registration, whether
centralized or otherwise, the premises for which such registration
has been obtained;
(b) where the service provider is not covered under sub-clause
H (a):
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(i) the location of his business establishment; or A
(ii) where the services are provided from a place other than the
business establishment, that is to say, a fixed establishment
elsewhere, the location of such establishment; or
(iii) where services are provided from more than one establishment,
whether business or fixed, the establishment most directly B
concerned with the provision of the service; and
(iv) in the absence of such places, the usual place of residence of
the service provider.
(i) “location of the service receiver” means:-
C
(a). where the recipient of service has obtained a single registration,
whether centralized or otherwise, the premises for which such
registration has been obtained;
(b). where the recipient of service is not covered under sub-clause
(a):
D
(i) the location of his business establishment; or
(ii) where services are used at a place other than the business
establishment, that is to say, a fixed establishment elsewhere, the
location of such establishment; or
(iii) where services are used at more than one establishment, E
whether business or fixed, the establishment most directly
concerned with the use of the service; and
(iv) in the absence of such places, the usual place of
residence of the recipient of service.
Explanation:- For the purposes of clauses (h) and (i), “usual place F
of residence” in case of a body corporate means the place where
it is incorporated or otherwise legally constituted.
Explanation 2:- For the purpose of clause (i), in the case of
telecommunication service, the usual place of residence shall be
the billing address. G
“3. Place of provision generally - The place of provision of
a service shall be the location of the recipient of service:
Provided that in case “of services other than online information
and database access or retrieval services” (Inserted vide
Notification 46/2012- Service Tax) where the location of the H
120 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 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.- The
place of provision of following services shall be the location where
the services are actually performed, namely:-
B (a) services provided in respect of goods that are required to be
made physically available by the recipient of service to the provider
of 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 remote
C location by way of electronic means the place of provision shall
be the location where goods are situated at the time of provision
of service:
Provided further that this clause shall not apply in the case of a
service provided in respect of goods that are temporarily imported
D into India for repairs and are exported after the repairs without
being put to any use in the taxable territory, other than that which
is required for such repair;
(b) services provided to an individual, represented either as the
recipient of service or a person acting on behalf of the recipient,
E which require the physical presence of the receiver or the person
acting on behalf of the receiver, with the provider for the provision
of the service.
7. Place of provision of services provided at more than one
location.-Where any service referred to in rules 4, 5 or 6 is provided
F at more than one location, including a location in the taxable
territory, its place of provision shall be the location in the taxable
territory where the greatest proportion of the service is provided.
8. Place of provision of services where provider and
recipient are located in taxable territory.- Place of provision
G of a service, where the location of the provider of service as well
as that of the recipient of service is in the taxable territory, shall
be the location of the recipient of service.
9. Place of provision of specified services.-The place of
provision of following services shall be the location of the service
H provider:-
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(a) Services provided by a banking company, or a financial A
institution, 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 other B
than, -
(i) aircrafts, and
(ii) vessels except yachts
upto a period of one month.”
C
(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,––
D
(a) where a supply is received at a place of business for which
the registration has been obtained, the location of such place of
business;
(b) where a supply is received at a place other than the place of
business for which registration has been obtained (a fixed E
establishment 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 location
of the establishment most directly concerned with the receipt of
the supply; and F
(d) in absence of such places, the location of the usual place of
residence of the recipient;
(15) location of the supplier of services means,––
(a) where a supply is made from a place of business for which
the registration has been obtained, the location of such place of G
business;
(b) where a supply is made from a place other than the place of
business for which registration has been obtained (a fixed
establishment elsewhere), the location of such fixed establishment;
H
122 SUPREME COURT REPORTS [2022] 17 S.C.R.

A (c) where a supply is made from more than one establishment,
whether the place of business or fixed establishment, the location
of the establishment most directly concerned with the provision
of the supply; and
(d) in absence of such places, the location of the usual place of
B residence of the supplier;”
Sections 12 and 13 of the IGST Act read thus:
Section 12. Place of supply of services where location of
supplier and recipient is in India– (1) The provisions of this
section shall apply to determine the place of supply of services
C where the location of supplier of services and the location of the
recipient of services is in India.
(2) The place of supply of services, except the services
specified in sub-sections (3) to (14),––

D (a) made to a registered person shall be the location of such
person;
(b) made to any person other than a registered person shall
be,––
(i) the location of the recipient where the address on record
E exists; 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 services
F provided by architects, interior decorators, surveyors, engineers
and other related experts or estate agents, any service provided
by way of grant of rights to use immovable property or for carrying
out or co-ordination of construction work; or
(b) by way of lodging accommodation by a hotel, inn, guest house,
G home stay, club or campsite, by whatever name called, and including
a house boat or any other vessel; or
(c) by way of accommodation in any immovable property for
organising any marriage or reception or matters related thereto,
official, social, cultural, religious or business function including
services provided in relation to such function at such property; or
H
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(d) any services ancillary to the services referred to in clauses A
(a), (b) and (c), shall be the location at which the immovable
property or boat or vessel, as the case may be, is located or intended
to be located:
Provided that if the location of the immovable property or boat
or vessel is located or intended to be located outside India, the B
place of supply shall be the location of the recipient.
Explanation.––Where the immovable property or boat or vessel
is located in more than one State or Union territory, the supply of
services shall be treated as made in each of the respective States
or Union territories, in proportion to the value for services C
separately collected or determined in terms of the contract or
agreement entered into in this regard or, in the absence of such
contract or agreement, on such other basis as may be prescribed.
(4) The place of supply of restaurant and catering services, personal
grooming, fitness, beauty treatment, health service including D
cosmetic and plastic surgery shall be the location where the
services are actually performed.
(5) The place of supply of services in relation to training and
performance appraisal to,––
(a) a registered person, shall be the location of such person; E
(b) a person other than a registered person, shall be the location
where the services are actually performed.
(6) The place of supply of services provided by way of admission
to a cultural, artistic, sporting, scientific, educational, entertainment
F
event or amusement park or any other place and services ancillary
thereto, shall be the place where the event is actually held or
where 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, educational G
or entertainment event including supply of services in relation to a
conference, fair, exhibition, celebration or similar events; or
(b) services ancillary to organisation of any of the events or
services referred to in clause (a), or assigning of sponsorship to
such events,–– H
124 SUPREME COURT REPORTS [2022] 17 S.C.R.

A (i) to a registered person, shall be the location of such person;
(ii) to a person other than a registered person, shall be the place
where the event is actually held and if the event is held outside
India, the place of supply shall be the location of the recipient.
Explanation.––Where the event is held in more than one State
B or Union territory and a consolidated amount is charged for supply
of services relating to such event, the place of supply of such
services shall be taken as being in each of the respective States
or Union territories in proportion to the value for services separately
collected or determined in terms of the contract or agreement
entered into in this regard or, in the absence of such contract or
C agreement, on such other basis as may be prescribed.
(8) The place of supply of services by way of transportation of
goods, 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 location
D
at which such goods are handed over for their transportation.
[Provided that where the transportation of goods is to a place
outside India, the place of supply shall be the place of destination
of such goods.]
(9) The place of supply of passenger transportation service
E
to,—
(a) a registered person, shall be the location of such person;
(b) a person other than a registered person, shall be the
place where the passenger embarks on the conveyance for
a continuous journey:
F
Provided that where the right to passage is given for future use
and the point of embarkation is not known at the time of issue of
right to passage, the place of supply of such service shall be
determined in accordance with the provisions of sub-section (2).
Explanation.––For the purposes of this sub-section, the return
G journey shall be treated as a separate journey, even if the right to
passage 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 be
the location of the first scheduled point of departure of that
H conveyance for the journey.
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(11) The place of supply of telecommunication services including A
data transfer, broadcasting, cable and direct to home television
services to any person shall,—
(a) in case of services by way of fixed telecommunication line,
leased circuits, internet leased circuit, cable or dish antenna, be
the location where the telecommunication line, leased circuit or B
cable connection or dish antenna is installed for receipt of services;
(b) in case of mobile connection for telecommunication and internet
services provided on post-paid basis, be the location of billing
address of the recipient of services on the record of the supplier
of services; C
(c) in cases where mobile connection for telecommunication,
internet service and direct to home television services are provided
on pre-payment basis through a voucher or any other means,––
(i) through a selling agent or a re-seller or a distributor of subscriber
identity module card or re-charge voucher, be the address of the D
selling agent or re-seller or distributor as per the record of the
supplier at the time of supply; or
(ii) by any person to the final subscriber, be the location where
such prepayment is received or such vouchers are sold;
E
(d) in other cases, be the address of the recipient as per the records
of 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 the
records of the supplier of services is not available, the place of
F
supply shall be location of the supplier of services:
Provided further that if such pre-paid service is availed or the
recharge is made through internet banking or other electronic mode
of payment, the location of the recipient of services on the record
of the supplier of services shall be the place of supply of such
services. G

Explanation.––Where the leased circuit is installed in more than
one State or Union territory and a consolidated amount is charged
for supply of services relating to such circuit, the place of supply
of such services shall be taken as being in each of the respective
H
126 SUPREME COURT REPORTS [2022] 17 S.C.R.

A States or Union territories in proportion to the value for services
separately collected or determined in terms of the contract or
agreement entered into in this regard or, in the absence of such
contract or agreement, on such other basis as may be prescribed.
(12) The place of supply of banking and other financial services,
B including stock broking services to any person shall be the location
of the recipient of services on the records of the supplier of
services:
Provided that if the location of recipient of services is not on the
records of the supplier, the place of supply shall be the location of
C the 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 of
the recipient of services on the records of the supplier of services.
D (14) The place of supply of advertisement services to the Central
Government, a State Government, a statutory body or a local
authority meant for the States or Union territories identified in the
contract or agreement shall be taken as being in each of such
States or Union territories and the value of such supplies specific
E to each State or Union territory shall be in proportion to the amount
attributable to services provided by way of dissemination in the
respective States or Union territories as may be determined in
terms of the contract or agreement entered into in this regard or,
in the absence of such contract or agreement, on such other basis
as may be prescribed.
F
Section 13. Place of supply of services where location of
supplier or location of recipient is outside India – (1) The
provisions of this section shall apply to determine the place of
supply of services where the location of the supplier of services
or the location of the recipient of services is outside India.
G
(2) The place of supply of services except the services specified
in sub-sections (3) to (13) shall be the location of the recipient of
services:
Provided that where the location of the recipient of services is
not available in the ordinary course of business, the place of supply
H shall be the location of the supplier of services.
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(3) The place of supply of the following services shall be the A
location where the services are actually performed, namely :—
(a) services supplied in respect of goods which are required to be
made physically available by the recipient of services to the supplier
of services, or to a person acting on behalf of the supplier of
services in order to provide the services: B
Provided that when such services are provided from a remote
location by way of electronic means, the place of supply shall be
the location where goods are situated at the time of supply of
services:
Provided further that nothing contained in this clause shall apply C
in the case of services supplied in respect of goods which are
temporarily imported into India for repairs and are exported after
repairs without being put to any other use in India, than that which
is required for such repairs or treatment or process;
(b) services supplied to an individual, represented either as the D
recipient of services or a person acting on behalf of the recipient,
which require the physical presence of the recipient or the person
acting on his behalf, with the supplier for the supply of services.
(4) The place of supply of services supplied directly in relation to
an immovable property, including services supplied in this regard E
by experts and estate agents, supply of accommodation by a hotel,
inn, guest house, club or campsite, by whatever name called, grant
of rights to use immovable property, services for carrying out or
co-ordination of construction work, including that of architects or
interior decorators, shall be the place where the immovable property F
is located or intended to be located.
(5) The place of supply of services supplied by way of admission
to, 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 such
G
admission or organisation, shall be the place where the event is
actually 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 shall
be the location in the taxable territory. H
128 SUPREME COURT REPORTS [2022] 17 S.C.R.

A (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 Union
territory, the place of supply of such services shall be taken as
being in each of the respective States or Union territories and the
value of such supplies specific to each State or Union territory
shall be in proportion to the value for services separately collected
B
or determined in terms of the contract or agreement entered into
in this regard or, in the absence of such contract or agreement, on
such other basis as may be prescribed.
(8) The place of supply of the following services shall be the
location of the supplier of services, namely:––
C
(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, including
D yachts but excluding aircrafts and vessels, up to a period of one
month.
Explanation.––For the purposes of this sub-section, the
expression,––
(a) “account” means an account bearing interest to the depositor,
E
and includes a non-resident external account and a non-resident
ordinary account;
(b) “banking company” shall have the same meaning as assigned
to it under clause (a) of section 45A of the Reserve Bank of India
Act, 1934 (2 of 1934);
F
(c) ‘‘financial institution” shall have the same meaning as assigned
to it in clause (c) of section 45-I of the Reserve Bank of India
Act, 1934 (2 of 1934);
(d) “non-banking financial company” means,––
G (i) a financial institution which is a company;
(ii) a non-banking institution which is a company and which has
as its principal business the receiving of deposits, under any
scheme or arrangement or in any other manner, or lending in any
manner; or
H
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(iii) such other non-banking institution or class of such institutions, A
as the Reserve Bank of India may, with the previous approval of
the 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 destination B
of such goods.
(10) The place of supply in respect of passenger transportation
services shall be the place where the passenger embarks on the
conveyance for a continuous journey.
(11) The place of supply of services provided on board a C
conveyance during the course of a passenger transport operation,
including services intended to be wholly or substantially consumed
while on board, shall be the first scheduled point of departure of
that conveyance for the journey.
(12) The place of supply of online information and database access D
or retrieval services shall be the location of the recipient of services.
Explanation.––For the purposes of this sub-section, person
receiving such services shall be deemed to be located in the taxable
territory, if any two of the following noncontradictory conditions
are satisfied, namely:–– E
(a) the location of address presented by the recipient of services
through internet is in the taxable territory;
(b) the credit card or debit card or store value card or charge
card or smart card or any other card by which the recipient of
F
services settles payment has been issued in the taxable territory;
(c) the billing address of the recipient of services is in the taxable
territory;
(d) the internet protocol address of the device used by the recipient
of services is in the taxable territory; G
(e) the bank of the recipient of services in which the account
used for payment is maintained is in the taxable territory;
(f) the country code of the subscriber identity module card used
by the recipient of services is of taxable territory;
H
130 SUPREME COURT REPORTS [2022] 17 S.C.R.

A (g) the location of the fixed land line through which the service is
received by the recipient is in the taxable territory.
(13) In order to prevent double taxation or non-taxation of the
supply of a service, or for the uniform application of rules, the
Government shall have the power to notify any description of
B services or circumstances in which the place of supply shall be
the place of effective use and enjoyment of a service.”
(emphasis added)
39. The provisions of the 2012 Rules and the relevant provisions
of IGST Act are to a great extent pari materia. As far as the location of
C service provider in this case (HGOs) is concerned, there is no dispute
that all of them have to be registered under Rule 4 of the Service Tax
Rules, 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 been
granted to HGO. Such premises are necessarily in India. Even assuming
D that any other sub-clauses of clause (h) are applicable, the location of
the service provider, in this case, will be in India. As far as the location
of 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. There
are four categories listed in sub-clause (b) of clause (i) of Rule 2. The
E first category is of business establishments. The second category is of
services which are used at a place other than the business establishment.
The third category is where services are used at more than one
establishment. On the face of it, the cases of Haj pilgrims undertaking
the Haj pilgrimage through HGOs will not be covered by these three
F categories. What is applicable to them is the fourth category which is
the usual place of residence of the recipient of service. It is not the place
where the service recipient receives service or is rendered service. It is
the place of ordinary residence of the service recipient which, in this
case, will be in taxable territory. As provided in Rule 3, the place of
provision of service is the location of the recipient of service. In this
G case, the recipients of service from HGOs are Indian residents and
accordingly, their place of residence in India will be the place of provision
of service. Rule 8 provides that where the location of the provider of
service 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.
H Hence, in this case, the place of provision of service is the location of
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the service receiver in accordance with clause (i) of Rule 2 which will A
be in taxable territory.
40. However, reliance was sought to be placed by the petitioners
on Rule 4, in particular Clause (b) thereof. Rule 4 is applicable to
performance based service which provides that the place of provision of
two services set out in the said Rule shall be the location where services B
are actually performed. Clause (a) of Rule 4 is applicable to services
provided in respect of goods which obviously will not apply in the present
case. The petitioners are relying upon clause (b) of Rule 4. The title of
Rule 4 suggests that it is applicable to performance based services. HGOs
do not render performance based services looking to the nature of the
services they render, which we have discussed above in detail. Therefore, C
Clause (b) of Rule 4 will not apply to HGOs. What will apply is Rule 3
which will mean that the place of provision of the service shall be the
location of the recipient of service in accordance with Rule 2(i)(b)(iv).
Thus, service is rendered by HGOs to the Haj pilgrims within taxable
territory. That is how the charging section will apply. D
41. There was an attempt made to argue that Haj pilgrimage will
be 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 admission
to, or organization of, a cultural, artistic, sporting, scientific, E
educational, or entertainment event, or a celebration, conference,
fair, exhibition, or similar events, and of services ancillary to such
admission, 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 ejusdem F
generis. Hence, the Haj pilgrimage cannot be an event.
42. Even if we assume that the service rendered by HGOs to Haj
pilgrims 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 of G
supply 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 of
the said Rules of 2012, the location of the service receiver will be the
usual place of residence of the Haj pilgrim in India. Therefore, the service
rendered by the HGOs to Haj Pilgrims is taxable for service tax as the H
132 SUPREME COURT REPORTS [2022] 17 S.C.R.

A service to Haj pilgrims is provided or agreed to be provided in taxable
territory. The service is rendered by providing or agreeing to provide
Haj pilgrimage tour package.
44. We may reiterate here that as prayed by the parties during
arguments, we are not going into the issue of extra-territorial operations
B of the laws relating to service tax and the said issue is left open. Even
the issue of the validity of the 2012 Rules has not been seriously canvassed
at the time of oral submissions. In one of the writ petitions, the ground of
violation of Article 25 of the Constitution of India has been taken without
making even an attempt to substantiate the same.
C 45. The petitioners have relied upon the decision of this Court in
the case of All–India Federation of Tax Practitioners & Ors.3 and
certain decisions of High Courts and CESTAT. The said decisions apply
to the fact situation before 1st July, 2012 when negative tax regime was
not in force. We are concerned in these cases with the negative service
tax regime which commenced from 1st July 2012. Therefore, the same
D will not apply to these cases.
APPLICABILITY OF EXEMPTION NOTIFICATION
46. The question is whether the exemption granted under the Mega
Exemption Notification will apply in this case. As mentioned earlier, the
E Exemption Notifications under the IGST and the GST Acts so far as the
Haj pilgrimage is concerned, are pari materia with the Mega Exemption
Notification. It is, therefore, necessary to advert to the Mega Exemption
Notification. The Mega Exemption Notification contains a list of services
which are exempted from service tax leviable under Section 66B. In this
case, Clauses 5 and 5A are pressed into service by the petitioners which
F read thus:
“5. Services by a person by way of-
(a) renting of precincts of a religious place meant for general
public, owned or managed by an entity registered as a charitable
or religious trust under section 12AA of the Income-tax Act,
G
1961(hereinafter referred to as the Income-tax Act), or a trust or
an institution registered under sub clause (v) of clause (23C) of
section 10 of the Income-tax Act or a body or an authority covered
under clause (23BBA) of section 10 of the Income-tax Act;”
substituted vide Notification 40/2016- Service Tax; or
H
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 133
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(b) conduct of any religious ceremony; A
5A. Services by a specified organisation in respect of a
religious pilgrimage facilitated by the Ministry of External
Affairs of the Government of India, under bilateral
arrangement;”
(emphasis added) B

47. Ex facie, Clause 5A will have no application as it is applicable
to services by specified organisations in respect of a religious pilgrimage
facilitated by the Ministry of External affairs of the Government of India
under bilateral arrangement. The specified organisations have been
defined in paragraph 1(1)(a)(zfa) of the Mega Exemption Notification. C
Specified organisations, as stated therein, are only two categories of
organisations. The first one is Kumaon Mandal Vikas Nigam Limited, a
Government of Uttarakhand Undertaking and Haj Committee or State
Committee under the said Act of 2002. The Haj Committee renders
services in relation to the Haj pilgrimage which is facilitated by the Ministry D
of External Affairs of the Government of India under the bilateral
arrangement with the Kingdom of Saudi Arabia.
48. In support of the contention that the Clause 5(b) of the Mega
Exemption Notification is applicable, Shri Arvind P. Datar, the learned
senior counsel with all fairness pointed out that in the case of E
Commissioner of Customs (Import) Mumbai v. Dilip Kumar and
Company and Ors.20, a Constitution Bench of this Court held that an
exemption notification should be interpreted strictly and in case of any
ambiguity in the exemption notification, the same must be interpreted in
favour of the revenue. In paragraph 66 and in particular 66.1 to 66.3 in
the case of Dilip Kumar and Company20 it was held thus: F
“66.1. Exemption notification should be interpreted strictly;
the burden of proving applicability would be on the assessee
to show that his case comes within the parameters of the
exemption clause or exemption notification.
G
66.2. When there is ambiguity in exemption notification
which is subject to strict interpretation, the benefit of such
ambiguity cannot be claimed by the subject/assessee and it
must be interpreted in favour of the Revenue.

20
2018 (9) SCC 1 H
134 SUPREME COURT REPORTS [2022] 17 S.C.R.

A 66.3. The ratio in Sun Export case [Sun Export
Corpn. v. Collector of Customs, (1997) 6 SCC 564] is not correct
and all the decisions which took similar view as in Sun Export
case [Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC
564] stand overruled.”
B (emphasis added)
49. But Shri Datar urged that when the exemption is for beneficial
purposes, a different rule will apply. In the case of Government of Kerala
& Anr. v. Mother Superior Adoration Convent2 relied upon by Shri
Datar, this Court referred to its decision in the case of Commissioner
C of Customs (Preventive) Mumbai v. M. Ambalal and Company21
and held that the law laid down in the case of M. Ambalal and
Company21 has not been disturbed by the Constitution Bench in the
case of Dilip Kumar and Company20. In paragraph 23, this Court in
the case of Mother Superior Adoration Convent2 held thus:

D “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 between
exemptions which are to be strictly interpreted as opposed to
beneficial exemptions having as their purpose—encouragement
or promotion of certain activities. This case felicitously put the
E law 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. The
rule regarding exemptions is that exemptions should
F generally be strictly interpreted but beneficial exemptions
having their purpose as encouragement or promotion of
certain activities should be liberally interpreted. This
composite rule is not stated in any particular judgment in
so many words. In fact, majority of judgments emphasise
G that exemptions are to be strictly interpreted while some
of them insist that exemptions in fiscal statutes are to be
liberally interpreted giving an apparent impression that they
are contradictory to each other. But this is only apparent. A
close scrutiny will reveal that there is no real contradiction
21
H 2011 (2) SCC 74
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amongst the judgments at all. The synthesis of the views is A
quite clearly that the general rule is strict interpretation
while special rule in the case of beneficial and promotional
exemption is liberal interpretation. The two go very well
with each other because they relate to two different sets of
circumstances.”
B
(emphasis added)

Thereafter, in paragraph 25, this Court referred to and quoted the
relevant portion of the Constitution Bench decision in the case of Dilip
Kumar and Company20. In paragraphs 26 and 27, this Court proceeded C
to 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 distinction
between exemption provisions generally and exemption provisions D
which have a beneficial purpose. We cannot agree with Shri
Gupta’s contention that sub silentio the line of judgments qua
beneficial exemptions has been done away with by this five-Judge
Bench. It is well settled that a decision is only an authority for
what it decides and not what may logically follow from it E
(see Quinn v. Leathem [Quinn v. Leathem, 1901 AC 495 (HL)]
as followed in State of Orissa v. Sudhansu Sekhar Misra [State
of Orissa v. Sudhansu Sekhar Misra, (1968) 2 SCR 154 : AIR
1968 SC 647] , SCR at pp. 162-63 : AIR at pp. 651-52, para 13).
27. This being the case, it is obvious that the beneficial F
purpose of the exemption contained in Section 3(1)(b) must
be given full effect to, the line of authority being applicable
to the facts of these cases being the line of authority which
deals with beneficial exemptions as opposed to exemptions
generally in tax statutes. This being the case, a literal
formalistic interpretation of the statute at hand is to be G
eschewed. We must first ask ourselves what is the object
sought to be achieved by the provision, and construe the
statute in accord with such object. And on the assumption
that if any ambiguity arises in such construction, such
ambiguity must be in favour of that which is exempted.
H
136 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Consequently, for the reasons given by us, we agree with the
conclusions reached by the impugned judgments [Mother
Superior v. State of Kerala, 2007 SCC OnLine Ker 578] , [Unity
Hospital (P) Ltd. v. State of Kerala, 2010 SCC OnLine Ker 4679]
of the Division Bench and the Full Bench.”
B (emphasis added)
50. The submission of the petitioners is that clause (5) of the
Mega Exemption Notification contains a beneficial exemption and
therefore, the same will have to be construed in accordance with the
object sought to be achieved. The submission is that as there is an
C ambiguity in the construction of Clause 5, the construction in favour of
that which is exempted should be accepted.
51. Now, adverting to sub-clause (b) of Section 5, we find that the
exemption has been granted in respect of services by a person by way
of conduct of any religious ceremony. Thus, it refers to a person who is
D naturally the service provider. The sub-Clause (b) applies when the service
provider renders service by way of conduct of any religious ceremony.
The notification does not say that service provided to the service receiver
to enable him to conduct religious ceremony, has been exempted. It only
exempts service provided by way of conduct of any religious ceremony.

E 52. It must be noted here that Clause 5A of the same Mega
Exemption Notification grants exemption to the service rendered by Haj
Committees in respect of a religious pilgrimage. Thus, the same Mega
Exemption Notification makes a clear distinction between ‘religious
ceremony’ and ‘religious pilgrimage’. As Haj Committees render services
only in respect of Haj pilgrimage, the religious pilgrimage referred to in
F Clause 5A as regards the Haj Committee, is Haj pilgrimage. Thus, the
Mega Exemption Notification exempts the two specified organisations
that render services in respect of a religious pilgrimage. This exemption
under Clause 5A is not applicable to HGOs as the HGOs are not the
specified organizations. If the intention and object was to provide service
G tax exemption to services provided by HGOs in respect of religious
pilgrimage, the notification would have specifically provided so. However,
the exemption as regards religious pilgrimage has been confined only to
the services rendered by the specified organisations in respect of a religious
pilgrimage facilitated by the Ministry of External Affairs of the
Government of India under a bilateral arrangement. An exemption has
H not been provided to any other service provider rendering service in
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respect of a religious pilgrimage. Whereas, sub-Clause (b) of Clause 5 A
is applicable to services rendered by way of conduct of any religious
“ceremony”. A clear distinction has been made between a service
provided in respect of religious pilgrimage and a service rendered by
way of conduct of any religious ceremony. We may give an example of
a person engaging a priest to perform certain religious ceremonies or
B
ritual or puja on his behalf. In such a case, the priest renders service by
way of conducting a religious ceremony. The service rendered by HGOs
to Haj pilgrims is to facilitate them to reach at the destination to perform
rituals/religious ceremonies. No religious ceremony is performed or
conducted by the HGOs. The religious ceremony is conducted by Haj
pilgrims or by someone else in the Kingdom of Saudi Arabia. According C
to us, there is absolutely no ambiguity in sub-clause (b) of clause 5 and
therefore, there is no occasion to apply the test laid down by this Court
in the case of Mother Superior Adoration Convent2.
53. The submission of Shri Datar, learned senior counsel was that
in Haj pilgrimage there are six entities involved which include concerned D
Ministry 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 clause
5 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. The E
word ‘person’ used in Clause 5 refers to a service provider and not to
the receiver of service. Even assuming that some services are provided
by the Kingdom of Saudi Arabia, the Government of India, Tawafa
establishments or Maollims to Haj pilgrims from India, it may be noted
here that they are not subjected to payment of service tax. The service F
tax is levied on HGOs being service providers. The real question is
whether HGOs are rendering service by way of conduct of any religious
ceremony. As held earlier, HGOs have no role to play in actual conduct
of religious ceremonies which are a part of Haj pilgrimage. The service
rendered by HGOs is by way of providing air bookings, arranging for the
stay of Haj pilgrims in Saudi Arabia, arranging for food while they are in G
Saudi Arabia, arranging for foreign exchange and arranging registration
with Tawafa establishment in the Kingdom of Saudi Arabia.
54. An attempt was made to bifurcate the services rendered by
HGOs into two parts. The first part is of the service rendered regarding
H
138 SUPREME COURT REPORTS [2022] 17 S.C.R.

A providing air booking and making available foreign exchange. A
submission was made that service tax or GST will be payable on these
two items and for the rest of the services rendered, service tax or GST
will not be payable as the services rendered are outside the taxable
territory. HGOs render service to Haj pilgrims in respect of the Haj
pilgrimage by providing a single package which consists of several parts
B
such as making air booking, providing foreign exchange and making
arrangements for stay and catering in Saudi Arabia, etc. HGOs offer a
comprehensive package of services relating to Haj pilgrimage. They
receive charges from Haj pilgrims for the entire package. It is not the
case of the HGOs that they charge separately for different services
C forming a part of the comprehensive package. Only a part of the package
cannot be picked up for invoking exemption. A particular service rendered
cannot be divided into parts. For the purposes of levy of service tax, the
service rendered cannot be dissected like this. The service rendered as
a whole by the HGOs to the Haj pilgrims will have to be taken into
account. This is apart from the fact that no part of the package offered
D
by 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 may
also note here that the exemption under sub-clause (b) of clause 5 is to
the service provider. We are noting this as one of the petitions has been
E filed by a service recipient.
55. Before we go to the argument regarding discrimination, we
may note here that with effect from 1st July 2017, service tax became
payable under the IGST Act. Even GST Act came into force from the
same date. Under both the enactments, tax is payable on the supply of
F goods or services. Sub-Section (2) of Section 13 of IGST Act provides
that 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 payable
on services supplied inter-state. Under sub-Section (1) of Section 9 of
the GST Act, service tax is leviable on services supplied intra-state.
G None of the sub-sections (3) to (13) of Section 13 of the IGST Act is
applicable in this case. Clause (14) of Section 2 of the IGST Act defines
the location of the recipient of service. This provision is pari materia
with the same definition under the 2012 Rules. As in case of 2012 Rules,
there are four categories. The service received from HGOs in connection
H with the Haj pilgrimage falls in the fourth category which lays down that
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the location of the recipient of service will be the location of usual place A
of residence of the recipient. Similar are the provisions in GST Act except
that the service tax is leviable on services supplied intra-State. Therefore,
as far as the services rendered by HGOs are concerned, there is no
material change brought about by the GST and the IGST Acts except
for the fact that the service tax is chargeable under these two statutes
B
and not under the Finance Act. Thus, the HGOs supply service to the
service recipient having location in India. The service is rendered by
providing a package for the Haj Pilgrimage to the service recipient who
is located in the taxable territory. That is how the service provided by
HGOs is taxable for service tax.
CONSIDERATION OF THE ISSUE OF DISCRIMINATION C

56. The other issue which arises for consideration is about the
submissions based on discrimination made under the Mega Exemption
Notification between the services rendered by specified organisations
and the services rendered by other service providers in respect of religious
pilgrimage. D
57. The submission of the petitioners is that there is no difference
between the service rendered by HGOs and the service rendered by the
Haj Committee to the Haj pilgrims. It is contended that the nature of
service rendered by both is the same. The submission of the petitioners
is that for the purposes of this exemption, the Haj Committee cannot E
constitute a class in itself. In short, the submission is that two equals are
being treated as unequal. The question is whether Haj Committees under
the 2002 Act, can be treated as a separate class. Article 14 does not
prohibit the classification of persons or class of persons provided it is not
arbitrary. The classification has to be reasonable. The classification is F
permissible provided it is founded on an intelligible differentia which must
distinguish the persons grouped together from those who are left out.
Moreover, the classification must have a rational nexus to the objects
sought to be achieved by it. While we examine this question in the context
of the infringement of Article 14 of the Constitution of India, it must be
remembered that only on the ground that both HGOs and the Haj G
Committee render service to the same class of persons, the classification
made by treating the Haj Committee as a separate class, cannot be
questioned. In a given case, different classes of service providers may
be rendering the same service to the same class of service recipients.
That, per se, does not amount to discrimination. The attack on the ground
H
140 SUPREME COURT REPORTS [2022] 17 S.C.R.

A of discrimination will have to be considered in the context of taxable
persons namely, the Haj Committee and HGOs. Under Section 3 of the
said Act of 2002, the Haj Committee of India was constituted. Similarly,
under Section 17, the State Haj Committees were constituted. Both the
categories of Haj Committees are body corporate, having perpetual
succession and a common seal with the power to acquire, hold and dispose
B
of movable and immovable properties. Section 4 determines the
composition of the Haj Committee of India and Section 18 determines
the composition of State Haj Committees. Section 9 lays down the duties
of the Haj Committee, which reads thus:
“9.Duties of Committee-(1) The duties of the Committee shall
C be-
(i) to collect and disseminate information useful to pilgrims, and to
arrange orientation and training programmes for pilgrims;
(ii) to advise and assist pilgrims during their stay at the embarkation
points in India, while proceeding to or returning from pilgrimage,
D
in all matters including vaccination, inoculation, medical inspection,
issue of pilgrim passes and foreign exchange, and to liaise with
the 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 Central
E
Government, and execute the plan, including the arrangements
for travel by air or any other means, and to advise in matters
relating to accommodations;
(v) to approve the budget estimates of the Committee and submit
it to the Central Government at least three months before the
F beginning of the financial year for its concurrence;
(vi) to co-ordinate with the Central Government, railways, airways
and travel agencies for the purpose of securing travelling facilities
for pilgrims;
(vii) to generally look after the welfare of the pilgrims;
G
(viii) to publish such proceedings of the Committee and such
matters of interest to pilgrims as may be determined by bye-laws
made in this behalf by the Committee;
(ix) to discharge such other duties in connection with Haj as may
be prescribed by the Central Government.
H
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 141
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(2) The Central Government shall afford all reasonable assistance A
to 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 State
Committees to implement the policies and directions of the Haj Committee
and perform prescribed duties. The functions and duties assigned to the B
Haj Committee need to be considered in the context of the preamble of
the 2002 Act. The object is to establish Committees for making
arrangements for the Muslims for the pilgrimage of Haj. The HGOs are
otherwise the tour operators carrying on business of arranging tours.
They get themselves registered as HGOs. As can be noticed from Section
C
9, the functions of the Haj Committee are not confined only to making
arrangements for enabling the pilgrims to undertake the Haj pilgrimage.
Its first duty is to collect and disseminate the information useful to the
pilgrims and to arrange orientation and training programmes for the
pilgrims. It is the duty of the Haj Committee to give relief to pilgrims and
visitors. It is its duty to generally look after the welfare of the pilgrims. D
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 of
the Central Government and to execute the same. The Haj Committee
is under an obligation to publish proceedings of the Committee. Under
Section 30, it is the duty of the Committee to create Central Haj Fund.
E
Similarly, under Section 32, the State Committees are under an obligation
to create State Haj Funds. The Central Government has the power to
reconstitute the Haj Committee and to remove the Chairperson, the Vice-
Chairperson and the Members of the Committee. There is a similar
power vesting in the State Government in respect of the State Committees.
Thus, the Haj Committees are statutory bodies working under the control F
and supervision of the Government. The Haj Committees are the agencies
and instrumentalities of the State. Apart from arranging visits of Haj
pilgrims for the purposes of Haj pilgrimage, there are important statutory
duties assigned to the Haj Committee which we have set out above. As
per clause (b) of Section 30, money collected from pilgrims for the
G
performance of the Haj pilgrimage becomes a part of the Central Haj
Fund, which can be utilized only for the purposes specified under Section
31. The funds can be used only for the purposes of paying salary and
allowances to the officers and employees of the Committee and for
payment of charges and expenses incidental to the objects specified in
Section 9. Other expenditure can be made only with the approval of the H
142 SUPREME COURT REPORTS [2022] 17 S.C.R.

A Central Government. Therefore, when the Haj Committee facilitates
the Haj pilgrims by making arrangements for their visit to the Kingdom
of Saudi Arabia for undertaking the Haj pilgrimage, there is a complete
absence of profit motive. On the contrary, the money received by the
Haj Committee from the Haj pilgrims goes to the statutory fund, which
in turn, has to be used inter alia for the benefit of Haj pilgrims. Even the
B
budget of the Haj Committee is required to be submitted to the Central
Government. Thus, the Central Government has all pervasive control
over the Haj Committee. The State Governments have the same control
over the State Committee. On the other hand, there are no onerous
duties attached to HGOs. They earn profit by rendering service to Haj
C pilgrims. Except for the stringent conditions for the registration, the
Government has no control over HGOs.
59. Shri Gopal Sankarnarayanan, the learned senior counsel relied
upon certain observations made by this Court in the case of Rafique
Sheikh Bhikan1. He relied upon paragraphs 11 and 12 of the said
D judgment, 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 and
they undertake the pilgrimage by taking out the savings made
over a lifetime, in many cases especially for this purpose. Haj
E consists of a number of parts and each one of them has to be
performed in a rigid, tight and time-bound schedule. In case due
to any mismanagement in the arrangements regarding the journey
to Saudi Arabia or stay or travelling inside Saudi Arabia any of the
parts is not performed or performed improperly then the pilgrim
loses not only his life savings but more importantly he loses the
F Haj. It is not unknown that on landing in Saudi Arabia a pilgrim
finds himself abandoned and completely stranded.
12. It is, thus, clear that in making selection for the
registration of PTOs the primary object and purpose of the
exercise cannot be lost sight of. The object of registering
G PTOs is not to distribute the Haj seats to them for making
business profits but to ensure that the pilgrim may be able
to perform his religious duty without undergoing any
difficulty, harassment or suffering. A reasonable profit to
the PTO is only incidental to the main object.”
H (emphasis added)
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However, the learned counsel has not referred to paragraph 10 of A
the same judgment, which takes a note of very substantial profits earned
by the PTOs. Paragraph 10 reads thus:
“10. From these facts, it is not difficult to deduce that the
dispute between the private operators/travel agents and
the Government of India in regard to registration as PTOs B
arises from a conflict of object and purpose. For most of
the private operators/travel agents registration as PTOs
is mainly a question of more profitable business. Under the
bilateral agreement no PTO can be given a quota of less
than fifty pilgrims. Normally, a quota of fifty pilgrims would
mean, on an average and by conservative standards, a profit C
of rupees thirty-five to fifty lakhs. This in turn means that
any private operator/travel agent, successful in getting
registered as a PTO with the Government of India would
easily earn rupees thirty-five to fifty lakhs in one-and-a-
half to two months and may then relax comfortably for the D
rest of the year without any great deal of business from any
other source. For the Government of India, on the other hand,
the registration of the PTOs, is for the purpose to ensure a
comfortable, smooth and trouble-free journey, stay and
performance of Haj by the pilgrims going through the PTOs.”
E
(emphasis added)
In fact, what is observed in paragraph 12 is in the context of the
controversy before this Court. It can be seen from paragraph 17 of the
said decision that the controversy was about the stringent conditions
imposed for the registration of PTOs. The observations in paragraph 12 F
are in that context. This Court held that the object of putting such stringent
conditions is to ensure that proper service is rendered to the Haj pilgrims.
In this context, the aforesaid observation has been made that the
reasonable profit to PTOs is incidental. It is not the case of the HGOs in
these petitions that they are doing any kind of charitable work by providing
service to Haj pilgrims. It is not their case that they are not earning any G
profit while providing a package to Haj pilgrims. They are rendering the
services with the object of earning profit.
60. Thus, the Haj Committee is a statutory committee which is
entrusted with various functions for the welfare of Haj pilgrims. Moreover,
H
144 SUPREME COURT REPORTS [2022] 17 S.C.R.

A the profit motive is completely absent in the case of the Haj Committee.
The money received by the Haj Committee from the pilgrims for rendering
service goes to a statutory fund created under the 2002 Act which is to
be used only for the purposes specified in the 2002 Act. That is the
reason why the Haj Committee constitutes a class in itself when it comes
to rendering service to Haj pilgrims. It is a separate class as distinguished
B
from HGOs. There is an intelligible differentia for this classification.
The object of exemption in paragraph 5A of the Mega Exemption
Notification is to promote the activity of the specified organisations of
rendering service for the religious pilgrimage. Both the organisations
which are specified in the notification are statutory organisations over
C which the Government has an effective control. Moreover, the service
rendered by the specified organisations to the devotees is not with the
object of making profit. Therefore, there is a nexus between the
classification made and the object sought to be achieved by granting
exemptions.
D 61. The learned senior counsel relied upon the decision of this
Court in the case of S. K. Dutta6. Certain provisions of the Income Tax
Act, 1961 granting exemption to the members of the Scheduled Tribes
were the subject matter of challenge before the High Court. While
granting exemption to the members of the Scheduled Tribes, the class of
the government servants who were the members of Scheduled Tribes
E was excluded from the benefits. It is in this context that the Apex Court
observed that the classification made on the basis of imaginary distinction
cannot be a valid classification. There has to be a reasonable and
substantial distinction for the purposes of making a valid classification.
On facts, the said decision will not help the petitioners.
F 62. In the meeting of the Fitment Committee, there were
deliberations on the representation made by the petitioners. The decision/
recommendation of the Fitment Committee contains valid reasons for
making a distinction between HGOs and Haj Committees. We are
reproducing the reasons recorded by fitment committee on the plea of
G discrimination 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 Haj
Committee of India is organizes the Haj/Umrah pilgrimage
H and not for the pilgrims for whom HGO[PTO] organizes
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 145
MUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.]

and conducts the pilgrimage. It is discriminatory and A
violative of Article 14 of the Constitution of India.
Services provided by a specified organisation in respect of a
religious pilgrimage facilitated by the Government of India, under
a bilateral arrangement, is exempt from GST. “Specified
organizations” are Kumaon Mandal Vikas Nigam Limited, a B
Government of Uttarakhand Undertaking and ‘Committee’ or
“State Committee as defined in section 2 of the Haj Committee
Act, 2002 (35 of 2002).
GST is leviable on tour operator service for organizing Haj/Umrah
pilgrimage tour. GST exemption is available only on services of C
religious pilgrimage facilitated by Central govt or State govt, under
a bilateral arrangement. There is no exemption available to services
of religious pilgrimage of any religion provided by any private tour
operator. Therefore, existing exemption available on services of
religious pilgrimage facilitated by Government of India is not
discriminatory. The legislature intends to exclude private tour D
operators from the purview of Service Tax/GST exemption.
Catena of court judgments have upheld that legislature has wide
latitude in taxation to choose the subject and people to be taxed.
Article 14 prohibits class legislation and not reasonable
classification. It is very much within the powers of E
legislature to categorize goods and services for the purpose
of taxation in such manner as meets the policies and
objectives of the government. The legislation intends to
differentiate between tour operator services rendered by
public and private entities. There is no discrimination F
between religious pilgrims. All pilgrims who undertake Haj/
Umrah pilgrimage or any other religious pilgrimage through
private tour operators are treated equally.
The Constitutional bench of Supreme Court in R.K. Garg v. Union
of India(1981) 4 SCC 675, laid down the test of classification by G
reference 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 or
characteristics which are to be found in all the person grouped
together and not in others who are left out but those qualities
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146 SUPREME COURT REPORTS [2022] 17 S.C.R.

A or characteristics must have a reasonable relation to the object
of the legislation. In order to pass the test, two conditions
must be fulfilled, namely, (1) that the classification must be
founded on an intelligible differentia, which distinguishes
those that are grouped together from others, and (2) that
differentia must have a rational relation to the object sought
B
to be achieved by the Act.”
The classification of pilgrims undertaking Haj/Umrah
pilgrimage tours through Haj Committee of India under
bilateral arrangement and those undertaking tours through
private tour operators is based on an intelligible differentia
C having a rational relation to the object sought to be achieved
by the statute in question. Therefore, services Tax/GST
exemption on services provided by a specified organization in
respect of a religious pilgrimage facilitated by Government of India
under bilateral arrangement are not discriminatory and not violative
D of Article 14 of the Constitution.
As discussed above, the service of organizing and conduct of tour
for Haj/Umrah pilgrims by private tour operators is taxable under
GST. It is not covered under any of the existing exemptions from
GST. Therefore, the request to not levy GST or to clarify that
E GST is not leviable on the same is not acceptable.
As regards the request for exemption GST on the services of Haj
and Umrah tour provided by Haj Group Operators [Private Tour
Operators], the same has no merit. The private tour operators
supply such services on purely commercial basis to pilgrims
F who can afford it. GST is an indirect tax. The burden of the
tax is not on the suppliers but on the recipients. The service
was taxable in Service Tax also. There is no justification
for granting a new exemption. Exemptions not only cause loss
of revenue but also block input tax credit chain and credit
distortions.”
G
(emphasis added)
The reasons recorded are based on consideration of relevant
factors.
63. Strong reliance was placed by the Revenue on the decision of
H this Court in the Case of M. Jhangir Bhatusha & Ors13. The subject
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 147
MUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.]

of this petition was an order passed by the Government under sub-Section A
(2) of Section 25 of the Customs Act, 1962. By the said order, import of
the specified oils by the State Trading Corporation was made liable to
customs duty at the rate of 5% only and total exemption from auxiliary
and additional duty was granted. On the other hand, import of the same
specified oils by private importers was made liable to customs duty at
B
the rate of 12.5% ad velorem. Discrimination was alleged in this case
by contending that there is no rational basis for treating State Trading
Corporation 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 in
the exemption notifications under Section 25(2) of the Act are C
without foundation. It seems to us that the two reasons set forth
in the exemption notifications can constitute a reasonable basis
for those notifications. It does appear from the material before
us that international prices were fluctuating, and although
they may have shown a perceptible fall there was the D
apprehension that because of the history of fluctuations
there was a possibility of their rising in the future. The need
to protect the domestic market is always present, and
therefore encouragement had to be given to the imports
effected by the State Trading Corporation by reducing the
rate of customs duty levied on them. This involved a long E
term perspective, since the exclusive monopoly to import
these edible oils was now entrusted to the State Trading
Corporation. What appears to have dominated the policy of the
government in issuing the exemption notifications was the
consideration that the domestic prices of vanaspati should be F
maintained at reasonable levels. It cannot be doubted that the
entire edible oil market is an integrated one, and that it is not
reasonable to treat any one of the edible oils or vanaspati in
isolation. It is a well accepted fact that vanaspati manufacturers
constitute a powerful organised sector in the edible oil market,
and a high vanaspati price would encourage an unauthorised G
diversion of the edible oils to vanaspati manufacturing units,
resulting in a scarcity in the edible oil market, giving rise to erratic
prices and depriving consumers of access to edible oils. The need
for preventing vanaspati prices ruling high was also to prevent
people normally using vanaspati from switching over to other edible H
148 SUPREME COURT REPORTS [2022] 17 S.C.R.

A oils, thus leading to an imbalance in the oil market. An overall
view made it necessary to ensure that domestic prices of vanaspati
remained at reasonable levels. To all these considerations the
learned Attorney-General has drawn our attention, and we cannot
say that they are not reasonably related to the policy underlying
the exemption orders. So that the government would have sufficient
B
supplies of edible at hand in order to feed the market, the learned
Attorney-General says, it was considered desirable and in the
public interest to reduce the rate of customs duty to 5 per cent on
the imports made by the State Trading Corporation. Now it is
the Central Government which has to be satisfied, as the
C authority appointed by Parliament under Section 25(2), that
it is necessary in the public interest to make the special
orders of exemption. It has set out the reasons which
prompted it to pass the orders. In our opinion, the
circumstances mentioned in those notifications cannot be
said to be irrelevant or unreasonable. It is not for this Court
D
to sit in judgment on the sufficiency of those reasons. The
limitations on the jurisdiction of the court in cases where
the satisfaction has been entrusted to executive authority
to judge the necessity for passing orders is well defined
and has been long accepted.
E 14. It is true that the State dons the robes of a trader when it
enters the field of commercial activity, and ordinarily it can claim
no favoured treatment. But there may be clear and good reason
for making a departure. Viewed in the background of the
reasons for granting a monopoly to the State Trading
F Corporation, acting as an agent or nominee of the Central
Government in importing the specified oils, it will be evident
that policy considerations rendered it necessary to make
consummation of that policy effective by imposing a
concessional levy on the imports. No such concession is
called for in the case of the private importers who, in any
G event, are merely working out contracts entered into by
them with foreign sellers before 2-12-1978.
15. We are also not satisfied that any of the private importers
have made out that their business will be crippled or ruined in
view of the rate of customs duty visited on their imports. The
H
ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION 149
MUMBAI v. UNION OF INDIA [ABHAY S. OKA, J.]

material before us is not sufficient to warrant any conclusion in A
their favour.”
(emphasis added)
64. We are tempted to quote what the majority view in the case
of R. K. Garg v. Union of India & Ors.22 on the approach of the Court
in such matters. We quote paragraph 8: B

“8. Another rule of equal importance is that laws relating
to economic activities should be viewed with greater
latitude than laws touching civil rights such as freedom of
speech, religion etc. It has been said by no less a person
than Holmes, J., that the legislature should be allowed C
some play in the joints, because it has to deal with complex
problems which do not admit of solution through any
doctrinaire or strait-jacket formula and this is particularly
true in case of legislation dealing with economic matters,
where, having regard to the nature of the problems required D
to be dealt with, greater play in the joints has to be allowed
to the legislature. The court should feel more inclined to give
judicial deference to legislative judgment in the field of economic
regulation than in other areas where fundamental human rights
are involved. Nowhere has this admonition been more felicitously
expressed than in Morey v. Doud [351 US 457 : 1 L Ed 2d 1485 E
(1957)] where Frankfurter, J., said in his inimitable style:
“In the utilities, tax and economic regulation cases, there
are good reasons for judicial self-restraint if not judicial
deference to legislative judgment. The legislature after all
has the affirmative responsibility. The courts have only the F
power to destroy, not to reconstruct. When these are added
to 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 overruled
by events — self-limitation can be seen to be the path to G
judicial wisdom and institutional prestige and stability.”
The Court must always remember that “legislation is directed to
practical problems, that the economic mechanism is highly sensitive
and complex, that many problems are singular and contingent,
22
1981 (4) SCC 675 H
150 SUPREME COURT REPORTS [2022] 17 S.C.R.

A that laws are not abstract propositions and do not relate to abstract
units and are not to be measured by abstract symmetry”.
(emphasis added)
In the matter of grant of exemptions in tax matters, latitude has to
be given to the decision making. Ultimately, it is also a matter of policy.
B We have already held that there is a rational basis for classifying specified
organisations as a class and keeping out the Private Tour Operators
from 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 arguments
C based on discrimination have no substance at all, as HGOs and the Haj
Committees do not stand on par and in fact, the Haj Committees constitute
a separate class by themselves, which is based on a rational classification
which has a nexus with the object sought to be achieved.
66. Therefore, there is no merit in the challenge in the petitions.
D 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 be
decided in appropriate proceedings, as requested by the parties.
67. We are, therefore, of the view that the petitions are devoid of
merit and the same are, accordingly, dismissed. No order as to costs.
E
Nidhi Jain and Amarendra Kumar Writ petitions dismissed.
(Assisted by : Iram Jan, LCRA)

F

G

H