Order date - 26 July 2022

Facts

• Haj pilgrimage is a five-day religious pilgrimage to Mecca and nearby Holy places in Saudi Arabia. A bilateral agreement is executed every year between the Government of India and the Kingdom of Saudi Arabia to enable Haj pilgrims of India to undertake the pilgrimage. The said agreement sets out a certain number of pilgrims, who can undertake Haj from India. 30% of this quota is allocated to HGOs and the rest is assigned to the Haj Committee, which is a statutory body
• HGOs render services such as, 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.

Issue

• Whether Haj Group Organisers can claim an exemption under Mega Exemption Notification Clause 5(B)?

Order 

• The Court observed that the service rendered by HGOs to Haj pilgrims is to facilitate them to reach 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
• The Supreme Court has held that Haj Group Organisers (HGOs) or Private Tour Operators(PTOs) cannot seek exemption from the Goods and Services Tax(GST) for their services as per the Mega Exemption Notification issued under the GST Act
• The Court also observed that another clause in the Mega Exemption Notification, Clause 5B, exempted services by a specified organization in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under the bilateral arrangement. 
• Therefore, the Court held that the notification clearly makes a distinction between "conduct of any religious ceremony" and "services in respect of a religious pilgrimage" and only specified organizations can claim an exemption for the latter.
• It was further observed by the Court that those receiving HGOs service are located in India and the service is being rendered to the recipient who is located in the taxable territory, the Court held that the service provided by HGOs is taxable for service tax.
• Hence the Petition was set aside.