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The Supreme Court on Thursday opined that if the tax exemption is allowed for Hajj Pilgrimage then everyone going to Varanasi may also claim the exemption. It added that the exemption is for all cultures, it is not specific to Hajj.

Court made these observations in a plea seeking GST and Service Tax exemption on Hajj pilgrimage.

A bench of Justice AM Khanwilkar, Abhay S Oka and Justice CT Ravikumar noted that "Travelling is not a religious ceremony, the performance of Umrah is a religious ceremony."

The bench was hearing a batch of petitions filed by All India Haj Umrah Tour Organizer Associations seeking the removal of GST and Service Taxes on the Hajj services provided to Hajis of India in Saudi Arabia. For the performance of Hajj and Umrah, certain services are provided. Services include Air tickets, currency exchange, etc.

Counsel appearing for the petitioner submitted that for the services consumed in Saudi Arabia taxes cannot be levied in India. "It is very important where the service is consumed. The Statute says that tax will be levied where the Consumer is located. According to us, it's not the correct approach," The counsel added.

However, the bench while trying to understand the contention said that the Consumption theory that the petitioner is trying to put forth is, for example - “If an airline company which is not from India is flying from India, then only the proportion of tax will be for the ratio traveled in India?”

To which, the Counsel responded by stating that "In the airline analogy the services start from India. However, in our case, the services start in Saudi Arabia."

"If Haj ceremony is considered as a religious ceremony, merely because other services are bundled with the services we cannot be left out of the exception," the petitioner added.

However, the bench said that "Anything related to Religious Ceremony or conducted at a religious place. How are you included in this? If you stay in a private hotel and perform the religious ceremony at the Kaba, how can you be exempted?

The petitioner clarified that the petition is only claiming exemption from the services of stay and other services provided in Saudi Arabia. Counsel further informed the bench that if the Haj is performed through the Haj Committee of India, then it is exempted but not in the case of private agents.

Counsel further contended that the Quran requires people to perform Hajj with their own earnings and not from the subsidies provided by the Government. However, Justice Khanwilkar said that "claiming this exemption is also getting a subsidy from the Government. That is also the Government's money."

“The Services that I'm required to provide is in Saudi Arabia and it is not any travel, it is for the purpose of Haj and I'll have to conduct it in a specific way otherwise I'll be penalized. Therefore my submission is that it'll fall under the bracket of the exemption," Counsel added.

Senior Advocate Arvind P Datar also appearing for the petitioner submitted that "we need not go into the Constitutionality, suppose my child is going to England for his studies, can he be taxed in India? I request your Lordships to let go on the pilgrimage peacefully."

The Court has asked Datar to limit his arguments to the Religious Ceremony and not go into the part of Extra-Territorial as a matter over the issue is pending for judgment before another three judges bench.

The bench has heard the matter in part and allowed the parties to file written submissions. The matter is listed for April 26.

Cause Title: All India Haj Umrah Tour Organizer Association Mumbai Vs. Union of India & Ors.