ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION MUMBAI v. UNION OF INDIA & ORS.

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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)

50Copy pinpoint50. 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 ambiguity in the construction of Clause 5, the construction in favour of that which is exempted should be accepted.

51Copy pinpoint51. 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 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.

52Copy pinpoint52. 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 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 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.

53Copy pinpoint53. 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.

54Copy pinpoint54. An attempt was made to bifurcate the services rendered by HGOs into two parts. The first part is of the service rendered regarding H

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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 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 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 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 filed by a service recipient.

55Copy pinpoint55. 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 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 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 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 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

56Copy pinpoint56. 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

57Copy pinpoint57. 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 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 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

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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 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 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, 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

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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).”

58Copy pinpoint58. 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 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 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

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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.

59Copy pinpoint59. 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 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 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.

60Copy pinpoint60. Thus, the Haj Committee is a statutory committee which is entrusted with various functions for the welfare of Haj pilgrims. Moreover, H

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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 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 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.

61Copy pinpoint61. 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.

62Copy pinpoint62. 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 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 and not for the pilgrims for whom HGO[PTO] organizes

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and conducts the pilgrimage. It is discriminatory and 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 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 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 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 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 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 H

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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 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 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 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.

63Copy pinpoint63. Strong reliance was placed by the Revenue on the decision of H this Court in the Case of M. Jhangir Bhatusha & Ors13. The subject

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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 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 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 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 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 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 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

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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 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 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

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material before us is not sufficient to warrant any conclusion in A their favour.” (emphasis added)

64Copy pinpoint64. 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 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 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 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 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

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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.

65Copy pinpoint65. 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.

66Copy pinpoint66. 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.

67Copy pinpoint67. 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)