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New Delhi:
The Supreme Court of India has issued a notice to the Indian Medical Association (IMA) following a petition by the Central Government. The government is challenging a recent Kerala High Court division bench order that declared certain provisions of the Central Goods and Services Tax (CGST) Act, 2017, allowing the levy of GST on supplies by clubs and associations to their members, to be unconstitutional.
The Supreme Court bench, comprising Justices PS Narasimha and AS Chandurkar, has directed that no recovery actions be taken against the IMA for now, taking into account a plea made by Senior Advocate Arvind Datar, representing IMA, who requested that no recovery for the past period be initiated.
Background of the Dispute
The dispute traces back to last year when GST Intelligence issued a notice to the IMA, seeking compliance with GST regulations and requesting details of immovable properties registered under the IMA Kerala branch. This led IMA to approach the Kerala High Court after GST officials indicated potential actions attaching association properties.
IMA argued that, as a “charitable association,” it was not liable to pay GST. However, GST authorities claimed that 90% of IMA’s activities were non-charitable. In an initial verdict, the Kerala High Court ruled that IMA was liable to pay GST on goods and services supplied to its own members.
Following this, IMA challenged the order before a division bench, citing the mutuality principle—the idea that services by a club/association to its members are not taxable. They contested amendments introduced by the Finance Act, 2021, which made GST applicable to such supplies with retroactive effect from July 1, 2017.
Kerala High Court’s Significant Ruling
The Kerala High Court division bench, led by Justice Dr Jayasankaran Nambiar and Justice S Easwaran, declared the relevant sections in the CGST and Kerala GST Acts “unconstitutional and void,” holding them ultra vires the constitutional definition of “supply.” The bench also objected to retrospective effect being given to these provisions, finding it violated fairness and the rule of law.
Central Government’s Response
Dissatisfied with the High Court’s decision, the Union Government has approached the Supreme Court, leading to the present notice issued to IMA. The Supreme Court’s direction ensures that no recovery steps will be taken against IMA until further orders.
Disclaimer:
This news article is based on currently available information and recent legal proceedings. Legal outcomes may change as the case progresses through the courts. Readers are advised to refer to official sources or consult legal professionals for the most current and detailed guidance on the status and implications of the case.
