Indian Medical Association Vs Union of India (Kerala High Court)
Kochi: In a significant legal development, the Kerala High Court has declared key provisions of the Central Goods and Services Tax (CGST) Act, 2017, and the Kerala Goods and Services Tax (KGST) Act, which sought to levy GST on services provided by clubs and associations to their members, as unconstitutional and void.
A division bench, in its judgment on writ appeals filed by the Indian Medical Association (IMA), Kerala State Branch, and GST officials, held that Section 7(1)(aa) and Section 2(17)(e) of the GST Acts, to the extent they deem activities between an association and its members as ‘supply’, are beyond the legislative competence granted under the Constitution. The court also concurred with a single judge’s earlier finding that the retrospective application of these amendments was illegal.
The case originated from a writ petition filed by the IMA Kerala State Branch, apprehending coercive action from GST authorities for recovery of tax on various services it rendered to its member doctors. The association contended that its activities for members, structured under various mutual benefit schemes, did not constitute a taxable supply of services as per the fundamental principles of taxation, particularly the doctrine of mutuality.
