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SC dismisses plea seeking GST exemption for Haj via private tour operators

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The Supreme Court on Tuesday has dismissed a batch of petitions filed by various private tour operators seeking exemption from the goods and services tax (GST) for Haj and Umrah services offered to pilgrims.

The judgement was pronounced by a Bench of Justices AM Khanwilkar, AS Oka and CT Ravikumar on 17 petitions filed by various tour operators and State Haj organisers challenging differential GST levied which gets passed on to Haj pilgrims.

The tour operators had challenged the levy of GST on Haj pilgrims who avail services offered by registered private tour operators on the ground that no tax law can be applicable on extraterritorial activities as per Article 245 of the Constitution.

They had also argued that the levy is discriminatory as it exempts certain pilgrims who undertake the journey through the Haj Committee of India. A GST levy of five per cent (with input tax credit) is applicable on air travel by pilgrims who utilise the services of non-scheduled/charter operations for religious pilgrimage facilitated by the Centre under bilateral arrangements.

However, if the services of a specified organisation in respect of a religious pilgrimage is facilitated by the external affairs ministry under bilateral arrangement, the rate would be nil.

The petitioners had argued that the journey and the privileges are also part of the religious ceremony and cannot be separated from the pilgrimage, and is thus eligible for exemption.

Besides, it was contended that these amenities are provided in Saudi Arabia and outside the tax regime in India.

Sandeep Sehgal, partner-tax at AKM Global said,”The Supreme Court has rejected the ground of discrimination as the exemption is already available for tours for Haj Pilgrimage, if conducted through approved channels. Hence, other private operators operating such tours shall be required to charge GST on their services.”

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