Thread by @lawbarandbench

#SupremeCourt to continue hearing matters of pvt tour operators seeking GST and service tax exemption for Hajj

State to argue today
Sr Advs Arvind Datar and Gopal Sankaranarayan submitted in court yesterday

Bench: One contention is no intelligible differentia between pvt and Hajj Group operators

Adv: Distinction was challenged but court did not interfere as based on policy matters. Ultimately organising travel to Hajj. Threshold requirement in service tax law is

Adv: Service provider, receiver, Provision of service, and backed by a consideration.
A contract driven law, that's why making difference between pilgrim, pilgromage and operator

Bench: Operator as facilitator of religious ceremony?

Adv: Only in operation as service provider

Adv: The tour operators not providing anything as to pilgrim's rites. Only facilitating travel etc

J Khanwilkar: They charge money for conduct of religious ceremony so needs to be excluded is crux of argument

Adv: Pilgrims doing something personal to them, others facilitate

Adv: Recipients don't come into direct contract with anyone outside India. it's like this, i choose to go and choose to do so in this way.
In notification contrasting expressions appear as : Pilgrims recipients and operators providers but latter's service not religious but

Adv: only to take them there. Ultimately they are facility providers. They have a network for the same.

#Haj #Hajj

Adv reads from written submissions, stresses that conduct of religious ceremonies must for exemption

J Khanwilkar: What if money to conduct religious rites is conducted by these tour operators?

Adv: Eg of Tirupati Sevas, contract is b/w pilgrims and temple, no service tax

Adv: ... On ticket. That's why service tax contract driven.

J Khanwilkar: Known amounts fixed can be excluded, to that extent ...

Adv: Amount is qua the temples. We can't break the bundle and divide contracts. When I pay tour operator, service and responsibility to facilitate

Adv: That transaction is not a religious ceremony. It's an end to end contract, our respectful submission.
Going thru Hajj committee, no GST charged. Airfare contact between committee and airline, pilgrim not involved.

J Oka: If temples engage contractor to provide religious ceremony, still it be charged for service tax?

State Counsel: That contractor is service provider. Booking for a ceremony is different from conducting ..

J Khanwilkar: Only that person conducting the ceremony will get exemption not the service provider? As in only religious head not the provider?

Adv: Yes

J Khanwilkar: Say if two contracts. One to collect charges for ceremony from religious head by operator, paid full amount qua

Bench: Which will be taxed?

Adv: Eg, can get full exemption if religious head getting the full amount.

Adv: Have been standing counsel for revenue for long, will never make such a submission in the top court that will strike at foundational basis of any law

J Oka: That you're rendering a service then.

Adv: Without consideration, or contract
J Khanwilkar: Free of charge pro bono

Adv: Let me summarise and conclude. Contact between pilgrim and operator is to facilitate and not conduct religious ceremony.
Conduct contemplates performance, by way of which it cannot be interpreted as in relation

Bench: Expression consciously used ...

Adv: Two notifications, cannot interpret synonymously ... to point of absurdity. Ceremony cannot be substituted by Pilgrimage.

J Khanwilkar: Ceremony may be part of Pilgrimage as a whole but not vice versa

Adv: If start extending to your operators this benefit

BENCH: All luxury trips will shown as to temples etc

Adv: We can't do this from customer point of view. Collection and levy cannot be the same. Classification has tu be qua the levy but who's collecting.

Differential duties not vitiating factor, will show judgments

J Khanwilkar: Here it's capped, so after that if want to travel?

Adv: When we choose exemption for govt services, we have conditions. Specified operators etc
State performs sovereign role can't be taxed but for commercial can be

Bench: As to Section 9, it is not duty of State to conduct Religious ceremony. That aspect is conspicuously absent here.

Adv: difference between pvt bodies and one accountable to parliament.

Adv: Parliament and State legislatures validate account of body incorporations.
Hajj committee is constitutional and thru act of parliament, functioning monitored.

Adv: No limitation for private operators.

( Reads from judgments)

Adv: Unlike income tax, in service tax you're allowed to pass it on and your don't become a violator.
Hajj committee qua pvt operators, such classification common across laws

Adv: Test has to be qua taxable amount not who is being taxed
Hajj committees and others chi l not comparable

Bench: Where is this in your (written) submission?

Adv: in GST phase, first governed by import and export routes. My lords will come to my compilation ... (reads)

Adv: Hajj tour earlier not taxed as partly in and outside country

BENCH: Why are we concerned with pre-2012 regime? Points noted, don't have to go into technicalities.

Adv: Here it's not a performance based service, cannot cull out to claim exemption.
Pilgrims are not parties to outsourcing.

Adv: Tomorrow, whatever services we can through mechanical we can keep outside country and avoid tax.

Counsel ends submissions.
Sr Adv Datar replies: Let me finish by 1.
Bench: Why do you want us to wait till then? Other matters also being heard.

Datar: Ceremony starts at place if embarkation.

BENCH: That question does not arise, keep it specific to conduct of religious ceremony. By way of can be read as for (in notification)

Datar: When you go for exemption notification, object must be seen as per Kerala HC order.

Bench: We want assistance in whether tour operators are service providers for Religious ceremony.

Datar: Tawaffahs paid for and they appoint HGOs.

Datar: In context of Hajj, Bench may interpret notification as per Bilateral agreement that devices everything as an integrated package so will include exemptions for our services provided.

Bench: To what end as per 5a?

Datar: Every word yaad to be given a meaning. Actual purpose is if it's a religious ceremony than includes all services towards it.

Bench: Their argument is it begins once out of country. Ceremony not same as Pilgrimage.

Datar: Yes. Pilgrimage is subset.

Bench: Correct.

Datar: If object is to make Hajji pay least, how can there be tax differentiation based on what operator he chooses?

Bench: How is this important for consideration of exemptions?

Datar: Whatever route they take, ultimately they should be granted exemption but should they tax the HGO
'By way of' even if read literally & purposively, Hajji cannot be denied exemption as religious ceremony conduct needs agent of operators who have pay Tawaffah as per treaty

Datar: Services by person will mean services by persons for conduct of ceremony. Will quote from a judgment of the High Court of Kerala.

Bench: (laughs) So much emphasis when you said Kerala. Has faith in that HC.

Datar reads from submissions to submit that object if statutes must be taken into account in terms of exemption and in cases if ambiguity

Datar: Distinction between HGOs and Hajj committee has to go. If object is to reduce tax burden on Hajji, then twin test of classification fails as person will have to pay more and this violates Article 14.

#Haj #Hajj

[Datar reads from judgments]

Datar: All Hajjis ultimately going to same Pilgrimage for same ceremony.
Eg of Ashirwad films, where court struck down exemption fir only Telugu films

Datar: Argument is consideration, service etc in India is taxable, I'll dispute that.
Now what these rules say is based on type of service, tax is there. In our case, if service provided to be at a particular place, has to be taxed there. Location defined.

Datar: It means place of performance of service.
Location should not be confused with residence, i don't become liable because location where service provided is different from where event was held.

J Oka: What is your argument? Performance based or based on location?
Datar: If Hajj is an event ..
J Khanwilkar: That starts here and begins here, then not ceremony.

Counsel: Let me argue for 2 mins
Bench: Use these 2 mins, give written submissions. Won't hear beyond lunch.

Datar: Under IGST, where supplying is relavant.

Bench: Want to record your submission as to this.

Datar: ASG submission as to rule cited is wrong.

Counsel: HGO is not in Mecca!
Bench: permit us to understand what you want to say.

Counsel: Please don't rewrite service tax law, contractors will suffer

Datar: Yes there will be a fire
BENCH: Let fire continue outside

Written submissions to be filed in a week
Datar: Will file more
J Khanwilkar: File whatever you want. We'll read it in vacations.

Hearing ends