Indian Medical Association, Kerala State Branch v. Union of India

Read Judgment : https://lawyerslibrary.in/books/kzmy/

Citations: 2025 KER 30517 : 2025 KLT OnLine 1769
Court: High Court of Kerala at Ernakulam
Coram: Hon’ble Dr. Justice A.K. Jayasankaran Nambiar & Hon’ble Mr. Justice Easwaran S.
Case Number: W.A. Nos. 1659, 1487/2024 & 468/2025; 11th April 2025

Also Read : Law Note: Doctrine of Mutuality in Indian Medical Association, Kerala State Branch v. Union of India & Ors.

Subject

Goods and Services Tax (GST) – Constitutionality of Amendments to CGST/KGST Acts – Doctrine of Mutuality – Retrospective Operation – Legislative Competence – Article 246A, Article 366(12A), Article 265 of the Constitution of India.

Held

  1. Unconstitutionality of Amendments: The provisions of Section 2(17)(e) and Section 7(1)(aa) along with the Explanation thereto of the Central Goods and Services Tax Act, 2017 (CGST Act) and the Kerala Goods and Services Tax Act, 2017 (KGST Act), which deem the supply of services by a club/association to its members as a taxable supply, were declared unconstitutional and void. These provisions were ultra vires Article 246A read with Article 366(12A) and Article 265 of the Constitution, as they contravened the constitutional understanding of “supply” and “service,” which require a plurality of persons (provider and recipient) and exclude self-supply/self-service based on the doctrine of mutuality, as upheld in State of West Bengal v. Calcutta Club Ltd. [(2019) 19 SCC 107].
  2. Doctrine of Mutuality: The principle of mutuality, which posits that an association and its members are not distinct entities for the purpose of taxation, survives under the Constitution post the 46th Amendment. The amendments to the CGST/KGST Acts, by statutorily expanding the definition of “supply” to include transactions between an association and its members without deeming such transactions as “services,” were beyond the legislative competence of Parliament and State legislatures, as they contradicted the judicially interpreted constitutional meaning of “supply” and “service.”
  3. Legislative Competence: A legislature deriving its authority from the Constitution cannot assign a statutory meaning to a term (e.g., “supply”) that conflicts with its judicially established constitutional meaning. The absence of a constitutional amendment to redefine “service” to include transactions informed by mutuality rendered the impugned provisions invalid.
  4. Retrospective Operation: Although the issue of retrospective operation was rendered moot due to the unconstitutionality of the provisions, the Court agreed with the Single Judge’s finding that the retrospective application of the amendments (effective from 01.07.2017) was illegal. Retrospective taxation, which imposes liability for a period when taxpayers could not anticipate such a levy or collect tax from recipients, violates the principle of fairness and the Rule of Law, a basic feature of the Constitution. The State failed to provide adequate justification for such retrospective operation.

Result

  • Writ Appeal No. 1659/2024 filed by the Indian Medical Association (IMA), Kerala State Branch, was allowed, granting consequential reliefs.
  • Writ Appeals Nos. 1487/ 2024 and 468/2025 filed by the GST authorities and the State of Kerala were dismissed.
  • No costs.

Parties

  • Appellant (W.A. No. 1659/2024): Indian Medical Association (IMA), Kerala State Branch, represented by Dr. Joseph Benaven, Secretary.
  • Appellants (W.A. Nos. 1487/2024 & 468/2025): Union of India, GST Authorities, and State of Kerala.
  • Respondents: Union of India, State of Kerala, GST Council, Additional Director General (GST Intelligence), Deputy Director (GST Intelligence), and IMA (in respective appeals).

Background

The IMA, Kerala State Branch, challenged the constitutional validity of amendments to the Central Goods and Services Tax Act, 2017 (CGST Act) and Kerala Goods and Services Tax Act, 2017 (KGST Act), specifically Section 2(17)(e) and Section 7(1)(aa) with the Explanation, introduced via the Finance Act, 2021. These amendments deemed services provided by a club or association to its members as taxable supplies under GST, effective retrospectively from 01.07.2017. The IMA, running mutual benefit schemes (e.g., Social Security Schemes, Professional Disability Support Scheme) for its member-doctors, argued that these activities were not taxable due to the doctrine of mutuality, which posits that an association and its members are not distinct entities for taxation purposes. The Single Judge’s judgment dated 23.07.2024 in W.P.(C) No. 21297/2023 upheld the amendments but struck down their retrospective operation. Both parties appealed.

Issues

  1. Are the amendments to Section 2(17)(e) and Section 7(1)(aa) of the CGST/KGST Acts, deeming services by an association to its members as taxable, constitutionally valid under Article 246A, Article 366(12A), and Article 265 of the Constitution?
  2. Does the doctrine of mutuality survive under the GST regime, and can it exempt IMA’s mutual benefit schemes from GST?
  3. Is the retrospective operation of the amendments from 01.07.2017 legally valid?

Arguments

IMA’s Arguments (W.A. No. 1659/2024):

  • The doctrine of mutuality, upheld in State of West Bengal v. Calcutta Club Ltd. [(2019) 19 SCC 107], survives post the 46th Constitutional Amendment, excluding self-supply/self-service from GST.
  • The constitutional concepts of “supply” and “service” require two distinct entities (provider and recipient), as established in Ranchi Club v. Chief Commissioner [2012 SCC Online SC 306]. The amendments, by deeming member services as taxable without amending the definition of “service,” exceed legislative competence under Article 246A.
  • A legislature cannot statutorily redefine “supply” to contradict its judicially interpreted constitutional meaning without amending the Constitution.
  • Retrospective taxation violates fairness and the Rule of Law, as IMA could not anticipate or collect taxes for prior periods.

Union of India & GST Authorities (W.A. No. 1487/2024):

  • The amendments are clarificatory, reinforcing the pre-existing liability under Section 7(1)(a), and are within Parliament’s power to legislate retrospectively.
  • The doctrine of mutuality is overridden by the non-obstante clause in Section 7(1)(aa), and IMA’s commercial activities (e.g., bio-medical waste treatment, hotel operations) negate mutuality claims.
  • Retrospective operation is valid unless it is oppressive or confiscatory, citing R.C. Tobacco v. Union of India [(2005) 7 SCC 725].
  • Most clubs/associations have complied with GST, indicating IMA’s liability was foreseeable.

State of Kerala (W.A. No. 468/2025):

  • Article 246A grants plenary power to levy GST, unrestricted by the doctrine of mutuality, as taxation is an incident of sovereignty (Jindal Stainless Ltd. v. State of Haryana [(2017) 12 SCC 1]).
  • The Constitution’s definitions of “goods” and “services” are broad, and “supply” should be interpreted expansively (State of U.P. v. Lalta Prasad Vaish [2024 SCC OnLine SC 3029]).
  • The amendments validly overcome Calcutta Club by expressly deeming associations and members as separate entities for GST purposes.

Court’s Findings

  1. Constitutionality of Amendments:
    • The Court held that Section 2(17)(e) and Section 7(1)(aa) with the Explanation of the CGST/KGST Acts are unconstitutional and void, being ultra vires Article 246A, Article 366(12A), and Article 265.
    • The constitutional concepts of “supply” and “service” require two distinct entities, excluding self-supply/self-service, as per Calcutta Club and Ranchi Club. The amendments, by deeming member services as taxable supplies without amending the definition of “service” or the Constitution, exceed legislative competence.
    • A legislature cannot redefine a constitutional term (e.g., “supply”) to contradict its judicially established meaning without a constitutional amendment, distinguishing cases like Navnit Lal C. Javeri [(1965) 56 ITR 198 (SC)] and Skill Lotto Solutions v. Union of India [(2021) 15 SCC 667].
  2. Doctrine of Mutuality:
    • The doctrine of mutuality survives under the GST regime, as affirmed in Calcutta Club. The IMA’s mutual benefit schemes, where members contribute for collective benefit, do not constitute taxable services due to the absence of a distinct provider-recipient relationship.
    • The non-obstante clause in Section 7(1)(aa) cannot override the constitutional framework without a corresponding amendment to redefine “service.”
  3. Retrospective Operation:
    • The issue was moot due to the unconstitutionality of the provisions, but the Court agreed with the Single Judge that retrospective operation from 01.07.2017 was illegal.
    • Retrospective taxation, without allowing taxpayers to collect tax from recipients, violates fairness and the Rule of Law, a basic feature of the Constitution. The State provided no justification for such operation, failing the “culture of justification” standard.

Decision

  • W.A. No. 1659/2024 (IMA): Allowed. The impugned provisions were struck down, and IMA was granted consequential reliefs, exempting its mutual benefit schemes from GST.
  • W.A. Nos. 1487/2024 (Union & GST Authorities) & 468/2025 (State of Kerala): Dismissed.
  • No Costs.

Significance

This judgment reinforces the doctrine of mutuality in the GST regime, limiting legislative power to tax transactions between associations and members without constitutional amendments. It underscores the supremacy of judicially interpreted constitutional terms over statutory redefinitions and protects taxpayers from unfair retrospective taxation, aligning with the Rule of Law.

Counsel

  • For IMA: Sri. Arvind P. Datar (Sr. Advocate), Sri. P.R. Renganath, Sri. George Varghese, Sri. Manu Srinath, Sri. Nimesh Thomas, Sri. Lijo John Thampy.
  • For Union & GST Authorities: Sri. A.R.L. Sundaresan (Additional Solicitor General), Sri. P.R. Renganath, Sri. Sreelal N. Warrier, Sri. Shaiju K.S.
  • For State of Kerala: Sri. Mohammed Rafiq (Special Government Pleader, Taxes).

Key Precedents

  • State of West Bengal v. Calcutta Club Ltd. [(2019) 19 SCC 107]
  • Ranchi Club v. Chief Commissioner of Central Excise & Service Tax [2012 SCC Online SC 306]
  • State of Madras v. Gannon Dunkerley & Co. [AIR 1958 SC 560]
  • Navnit Lal C. Javeri v. K.K. Sen [(1965) 56 ITR 198 (SC)]
  • Skill Lotto Solutions Pvt. Ltd. v. Union of India [(2021) 15 SCC 667]
  • Jindal Stainless Ltd. v. State of Haryana [(2017) 12 SCC 1]
  • State of U.P. v. Lalta Prasad Vaish [2024 SCC OnLine SC 3029].

Precedents and Observations

  1. State of West Bengal v. Calcutta Club Ltd. [(2019) 19 SCC 107]
    • The principle of mutuality survives under the Constitution even after the 46th Constitutional Amendment (1982). The Supreme Court held that services provided by incorporated clubs to their members were not taxable under the Finance Act, 1994, as the doctrine of mutuality implies no distinct provider-recipient relationship. The Court noted that the Explanation to Section 65B(44) of the Finance Act, 1994, applied only to unincorporated bodies, leaving incorporated bodies outside the scope of service tax due to mutuality.
    • In the context of GST, the judgment was cited to affirm that the doctrine of mutuality continues to apply unless overridden by a constitutional amendment redefining “service” to include transactions between a club/association and its members.
  2. Ranchi Club v. Chief Commissioner of Central Excise & Service Tax [2012 SCC Online SC 306]
    • The basic feature of both sale and services under tax law requires the existence of two distinct parties—a provider and a recipient. The concept of self-supply or self-service is not recognized for the purposes of taxation. This precedent was quoted with approval in Calcutta Club and relied upon to argue that the constitutional understanding of “supply” and “service” under GST excludes transactions informed by mutuality, as there is no plurality of persons in such cases.
  3. State of Madras v. Gannon Dunkerley & Co. [AIR 1958 SC 560]
    • A works contract does not constitute a sale of goods, as the traditional concept of “sale” under Entry 54 of List II (Seventh Schedule) did not encompass such transactions. This necessitated the insertion of Article 366(29A)(b) via the 46th Constitutional Amendment to deem works contracts as taxable sales.
    • The Court referenced this to illustrate that when the Supreme Court restricts the scope of a taxable event (e.g., “sale”), a constitutional amendment is required to expand the tax net, supporting the argument that the GST amendments required constitutional backing to tax mutual transactions.
  4. New India Sugar Mills Ltd. v. CST [1963 (14) STC 316]
    • Compulsory sales through Control Orders were not considered “sales” for taxation purposes. This led to the insertion of Article 366(29A)(a) to deem such transactions as taxable sales.
    • Cited to demonstrate the historical need for constitutional amendments to overcome judicial restrictions on taxable events, reinforcing the unconstitutionality of the CGST/KGST amendments without such an amendment.
  5. K.L. Johar and Co. v. CTO [AIR 1965 SC 1082]
    • A hire-purchase agreement was not a sale, necessitating Article 366(29A)(c) to include such transactions in the taxable net.
    • Referenced to show that legislative attempts to expand tax definitions beyond constitutional limits require constitutional amendments, supporting the IMA’s challenge.
  6. A.V. Meiyappan v. CCT [1967 (20) STC 115 (Mad)]
    • The transfer of the right to use goods was not a sale, leading to Article 366(29A)(d).
    • Used to highlight the pattern of constitutional amendments required to align statutory expansions with constitutional interpretations of taxable events.
  7. CTO v. Young Men’s Indian Association (Regd) [(1970) 1 SCC 462]
    • There could be no sale between a club/association and its members due to the doctrine of mutuality, prompting Article 366(29A)(e) to deem such supplies of goods as taxable sales.
    • Cited to argue that while the 46th Amendment addressed goods, no equivalent amendment was made for services, leaving mutual service transactions outside GST’s scope.
  8. Northern India Caterers (I) Ltd. v. Lt. Governor of Delhi [(1980) 2 SCC 167]
    • The supply of food and beverages in restaurants was not a sale, leading to Article 366(29A)(f).
    • Referenced to underscore the necessity of constitutional amendments to tax transactions judicially excluded from the definition of “sale.”
  9. Navnit Lal C. Javeri v. K.K. Sen, Appellate Assistant Commissioner of Income-Tax [(1965) 56 ITR 198 (SC)]
    • A Constitution Bench held that the term “income” in Entry 82 of List I (Seventh Schedule) could be interpreted broadly to include loans advanced to shareholders by a company, treated as dividends for taxation. The legislature could create a fiction to address tax evasion, provided there was a rational connection to the concept of “income.”
    • The Court distinguished this case, noting that “income” was not judicially restricted in the constitutional context, unlike “supply” and “service” in GST, which require two entities. Thus, the precedent did not support the GST amendments’ redefinition of “supply.”
  10. Skill Lotto Solutions Pvt. Ltd. v. Union of India [(2021) 15 SCC 667]
    • The inclusion of actionable claims in the definition of “goods” under Section 2(52) of the CGST Act was upheld, as the constitutional definition of “goods” in Article 366(12) was inclusive and not restrictive. The Constitution-framers intended a broad interpretation.
    • Distinguished by the Court, as there was no conflict between the statutory and constitutional meanings of “goods,” unlike the GST amendments’ redefinition of “supply,” which contradicted its judicially established constitutional meaning.
  11. Karnataka Bank v. State of Andhra Pradesh [(2008) 2 SCC 254]
    • A legislature can provide an artificial meaning to a term in a statute, even if it differs from its popular meaning.
    • The Court acknowledged this principle but held it inapplicable, as the issue was not about differing from popular meaning but contradicting the judicially interpreted constitutional meaning of “supply” and “service.”
  12. Ramanlal Bhailal Patel v. State of Gujarat [(2008) 5 SCC 449]
    • Similar to Karnataka Bank, a legislature may assign a statutory meaning different from the popular meaning.
    • Distinguished for the same reason as Karnataka Bank, emphasizing the constitutional constraint on redefining terms like “supply” against their judicially established constitutional sense.
  13. State of Madhya Pradesh v. Rakesh Kohli [(2012) 6 SCC 312]
    • Legislatures are accorded greater latitude in economic legislation, and statutes should not be struck down unless vitiated by constitutional infirmity.
    • The Court recognized this principle but found a definitive lack of legislative competence in the GST amendments, justifying their invalidation.
  14. Parmar Samanthbhai Umedsingh v. State of Gujarat & Ors. [(2022) 15 SCC 364]
    • Reiterated that economic laws enjoy legislative latitude unless constitutionally infirm.
    • Applied similarly to Rakesh Kohli, but the Court held that the GST amendments’ ultra vires nature warranted striking them down.
  15. Jawaharlal v. State of Rajasthan [1965 SCC Online SC 39]
    • Cited by respondents to support the legislature’s power to enact retrospective laws (Paras 18, 25).
    • Noted by the Court but not directly applied, as the primary issue was the unconstitutionality of the provisions, rendering retrospective operation moot.
  16. Lohia Machines Ltd. v. Union of India [(1985) 2 SCC 197]
    • Supported legislative authority for retrospective laws (Paras 28, 29).
    • Referenced by respondents but not pivotal, given the Court’s focus on constitutional invalidity.
  17. Ujagar Prints and Others v. Union of India [(1989) 3 SCC 488]
    • Upheld retrospective legislative power (Paras 65, 66).
    • Cited by respondents but overshadowed by the Court’s finding on unconstitutionality.
  18. R.C. Tobacco Pvt. Ltd. v. Union of India [(2005) 7 SCC 725]
    • A law is not unreasonable merely for being retrospective unless it is unduly oppressive or confiscatory.
    • Cited by respondents to defend retrospective GST amendments, but the Court agreed with the Single Judge that retrospective operation violated fairness and the Rule of Law.
  19. Union of India v. Exide Industries Ltd. [(2020) 20 SCC 57; (2020) 5 SCC 274]
    • Supported the validity of retrospective clarificatory amendments (Paras 21, 24; Para 44).
    • Noted by respondents but not persuasive, as the Court found the GST amendments substantive, not clarificatory, and unconstitutional.
  20. Prashanti Medical Services and Research Foundation v. Union of India [(2020) 14 SCC 785]
    • Upheld retrospective legislative power (Para 30).
    • Cited by respondents but not applied, as the Court prioritized the constitutional infirmity of the amendments.
  21. State of U.P. and Others v. Lalta Prasad Vaish and Sons [2024 SCC OnLine SC 3029]
    • A nine-judge Constitution Bench held that legislative entries must be given a wide meaning, and narrow interpretations are only warranted when limited by express language or to avoid overlap between entries. Incidental and ancillary matters are included within entries.
    • Cited by the State to argue for a broad interpretation of “supply” under Article 246A, but the Court held that the judicially established requirement of two entities for “supply” and “service” could not be overridden without constitutional amendment.
  22. Geo Miller & Co. (P) Ltd. v. State of M.P. [(2004) 5 SCC 209]
    • Constitutional definitions (e.g., Article 366(29A)) apply only where the defined expressions are used in the Constitution and if the context demands.
    • Cited by the State to argue that Article 366(29A) does not limit GST under Article 246A, but the Court emphasized the distinct constitutional framework for GST requiring two entities.
  23. Union of India v. Gwalior Rayon Silk Mfg. (Wvg.) Co. Ltd. [(1964) 53 ITR 466]
    • Legislative competence is only circumscribed by express constitutional prohibitions.
    • Cited by the State to assert unrestricted GST power under Article 246A, but the Court held that the judicial interpretation of “supply” and “service” imposed an implicit constitutional limit.
  24. Jindal Stainless Ltd. v. State of Haryana [(2017) 12 SCC 1]
    • A nine-judge Bench held that taxation is an incident of sovereignty, not curtailed by implied limitations.
    • Cited by the State to support GST’s plenary power, but the Court found that the constitutional requirement of two entities for “supply” and “service” was an express limitation.
  25. Mineral Area Development Authority v. SAIL [(2024) 10 SCC 1]
    • A nine-judge Bench held that limitations on plenary legislative powers must be express and specified in the Constitution.
    • Cited by the State, but the Court ruled that the judicially established meaning of “supply” and “service” constituted such a limitation.
  26. Bangalore Club v. CIT [(2013) 5 SCC 509]
    • The doctrine of mutuality, originating in common law, posits that a person cannot profit from themselves.
    • Referenced to explain the doctrinal basis for IMA’s argument that its mutual schemes are not taxable.
  27. Rana Girders Ltd. v. Union of India [(2013) 10 SCC 746]
    • Common law principles must yield to statutory provisions.
    • Cited with SICOM Ltd. to argue that statutory GST provisions override mutuality, but the Court held that such override required constitutional amendment.
  28. Union of India v. SICOM Ltd. [(2009) 2 SCC 121]
    • Statutory provisions prevail over common law principles.
    • Cited alongside Rana Girders, but the Court prioritized the constitutional framework over statutory redefinition.
  29. Indore Development Authority v. Manoharlal [(2020) 8 SCC 129]
    • A five-judge Bench affirmed that statutory provisions take precedence over common law principles.
    • Noted but not applied, as the Court focused on the constitutional invalidity of the GST amendments.
  30. Superintendent and Remembrancer of Legal Affairs v. Corp. of Calcutta [(1967) 2 SCR 170]
    • The application of English common law beyond Presidency Towns is a question of fact.
    • Cited to contextualize the common law origin of mutuality but not central to the Court’s reasoning.
  31. The Tata Iron & Steel Co. Ltd. v. The State of Bihar [(1958) 9 STC 267]
    • A state legislature has sovereign power to enact prospective and retrospective sales tax laws, with the seller bearing primary liability.
    • Cited by the State to defend retrospective GST, but the Court found retrospective operation unfair and unnecessary to decide given the provisions’ unconstitutionality.
  32. Jayam & Co. v. State of Tamil Nadu [(2016) 15 SCC 125]
    • A retrospective amendment reducing input tax credit was invalid as it curtailed a vested right.
    • Cited by IMA to challenge retrospective GST, but the Court did not rely on it, focusing instead on fairness and Rule of Law violations.

Summary of Precedents’ Role

  • Supporting IMA’s Case: Precedents like Calcutta Club, Ranchi Club, and the 46th Amendment cases (Gannon Dunkerley, Young Men’s Indian Association, etc.) were pivotal in establishing that the doctrine of mutuality survives and that constitutional amendments are required to tax transactions outside the judicially defined scope of “supply” or “service.”
  • Supporting Respondents: Cases like Navnit Lal C. Javeri, Skill Lotto Solutions, R.C. Tobacco, and Jindal Stainless were cited to argue legislative latitude in defining taxable events and enacting retrospective laws, but the Court distinguished them, emphasizing the constitutional constraint on redefining “supply” and “service.”
  • Neutral/Clarificatory: Cases like Lalta Prasad Vaish and Geo Miller provided interpretive principles for constitutional entries but did not override the Court’s focus on judicially established constitutional meanings.

This list comprehensively covers the precedents cited in the judgment, with observations tailored to their application in the Court’s reasoning.

Multiple Choice Questions (MCQs)

  1. What was the primary issue in Indian Medical Association, Kerala State Branch v. Union of India (W.A. Nos. 1659, 1487/2024 & 468/2025)?
    a) Validity of income tax on medical associations
    b) Constitutionality of GST amendments taxing services by associations to members
    c) Retrospective application of service tax laws
    d) Exemption of charitable organizations from GST Answer: b) Constitutionality of GST amendments taxing services by associations to members
    Explanation: The case challenged the validity of Section 2(17)(e) and Section 7(1)(aa) of the CGST/KGST Acts, which deemed services by an association to its members as taxable supplies under GST.
  2. Which constitutional provisions were central to the Court’s analysis of the GST amendments’ validity?
    a) Articles 14, 19, and 21
    b) Articles 246A, 366(12A), and 265
    c) Articles 301 and 304
    d) Articles 32 and 226 Answer: b) Articles 246A, 366(12A), and 265
    Explanation: The Court examined the amendments under Article 246A (GST legislative power), Article 366(12A) (definition of GST), and Article 265 (no tax without legal authority).
  3. What doctrine was pivotal in the Court’s decision to strike down the GST amendments?
    a) Doctrine of Pith and Substance
    b) Doctrine of Mutuality
    c) Doctrine of Colourable Legislation
    d) Doctrine of Proportionality Answer: b) Doctrine of Mutuality
    Explanation: The doctrine of mutuality, which holds that an association and its members are not distinct entities for taxation, was central to the Court’s finding that services to members are not taxable supplies.
  4. Which precedent was heavily relied upon to uphold the doctrine of mutuality in the GST context?
    a) Jindal Stainless Ltd. v. State of Haryana
    b) State of West Bengal v. Calcutta Club Ltd.
    c) Navnit Lal C. Javeri v. K.K. Sen
    d) Skill Lotto Solutions Pvt. Ltd. v. Union of India Answer: b) State of West Bengal v. Calcutta Club Ltd.
    Explanation: The Supreme Court’s ruling in Calcutta Club (2019) affirmed that mutuality excludes taxation of services between clubs and members, a principle extended to GST in this case.
  5. Why did the Court find the retrospective operation of the GST amendments illegal?
    a) It violated international tax treaties
    b) It imposed tax liability for a period when taxpayers could not anticipate or collect it
    c) It lacked parliamentary approval
    d) It applied only to unincorporated associations Answer: b) It imposed tax liability for a period when taxpayers could not anticipate or collect it
    Explanation: The Court held that retrospective taxation from 01.07.2017 violated fairness and the Rule of Law, as taxpayers like IMA could not have foreseen or collected the tax.
  6. What was the outcome of the Writ Appeals filed by the Union of India and the State of Kerala?
    a) Allowed with modifications
    b) Dismissed
    c) Remanded to the Single Judge
    d) Partially allowed Answer: b) Dismissed
    Explanation: The appeals by the Union (W.A. No. 1487/2024) and State of Kerala (W.A. No. 468/2025) were dismissed, as the Court upheld the unconstitutionality of the amendments.
  7. Which article of the Constitution was cited to argue that the GST amendments lacked legal authority?
    a) Article 14
    b) Article 265
    c) Article 300A
    d) Article 368 Answer: b) Article 265
    Explanation: Article 265, which prohibits taxation without legal authority, was invoked to declare the amendments ultra vires due to their conflict with the constitutional definition of “supply.”
  8. What was the Court’s reasoning regarding legislative competence to redefine “supply”?
    a) Legislature can redefine terms without constitutional amendment
    b) Redefinition must align with judicially established constitutional meaning
    c) Legislative competence is unrestricted under Article 246A
    d) Only Parliament can redefine constitutional terms Answer: b) Redefinition must align with judicially established constitutional meaning
    Explanation: The Court held that a legislature cannot assign a statutory meaning to “supply” that contradicts its judicially interpreted constitutional meaning without a constitutional amendment.
  9. Which case was distinguished to reject the argument that the legislature could redefine “supply”?
    a) State of Madras v. Gannon Dunkerley & Co.
    b) Navnit Lal C. Javeri v. K.K. Sen
    c) Ranchi Club v. Chief Commissioner
    d) Calcutta Club v. State of West Bengal Answer: b) Navnit Lal C. Javeri v. K.K. Sen
    Explanation: The Court distinguished Navnit Lal because “income” was not judicially restricted, unlike “supply” and “service,” which require two entities per judicial precedent.
  10. What relief was granted to the IMA in W.A. No. 1659/2024?
    a) Partial exemption from GST
    b) Consequential reliefs exempting mutual benefit schemes from GST
    c) Refund of all taxes paid since 2017
    d) Deferral of GST liability Answer: b) Consequential reliefs exempting mutual benefit schemes from GST
    Explanation: The Court allowed IMA’s appeal, striking down the amendments and granting reliefs to exempt its mutual benefit schemes from GST.

Frequently Asked Questions (FAQs)

  1. What was the core dispute in the Indian Medical Association v. Union of India case?
    The dispute centered on the constitutional validity of amendments to the CGST/KGST Acts (Section 2(17)(e) and Section 7(1)(aa)) that deemed services provided by an association like the IMA to its members as taxable supplies under GST, effective retrospectively from 01.07.2017. The IMA argued these provisions violated the doctrine of mutuality and exceeded legislative competence.
  2. What is the doctrine of mutuality, and how did it apply in this case?
    The doctrine of mutuality holds that an association and its members are not distinct entities for taxation purposes, as a person cannot provide a taxable service to themselves. The Court applied this doctrine to IMA’s mutual benefit schemes (e.g., Social Security Schemes), ruling that such transactions lack the provider-recipient distinction required for GST, as affirmed in State of West Bengal v. Calcutta Club Ltd..
  3. Why did the Court declare the GST amendments unconstitutional?
    The Court found Section 2(17)(e) and Section 7(1)(aa) ultra vires Articles 246A, 366(12A), and 265 of the Constitution. These provisions redefined “supply” to include member services without amending the constitutional definition of “service,” which requires two distinct entities. This contradicted the judicially established meaning of “supply” and “service,” exceeding legislative competence.
  4. What role did State of West Bengal v. Calcutta Club Ltd. play in the judgment?
    The Supreme Court’s decision in Calcutta Club (2019) was pivotal, as it upheld the doctrine of mutuality in the context of service tax, ruling that services by clubs to members are not taxable due to the absence of a distinct provider-recipient relationship. The Kerala High Court extended this principle to GST, striking down the amendments.
  5. Why was the retrospective operation of the amendments struck down?
    Although moot due to the amendments’ unconstitutionality, the Court agreed with the Single Judge that retrospective operation from 01.07.2017 was illegal. It violated fairness and the Rule of Law, as taxpayers like IMA could not anticipate the tax liability or collect it from members during the prior period, lacking justification from the State.
  6. Did the Court find the GST amendments to be clarificatory or substantive?
    The Court rejected the respondents’ claim that the amendments were clarificatory. It held them to be substantive, as they sought to create a new tax liability by redefining “supply” in a manner inconsistent with its constitutional meaning, requiring a constitutional amendment.
  7. How did the Court address the argument that Article 246A grants plenary GST power?
    The respondents argued that Article 246A provides unrestricted power to levy GST, but the Court held that this power is limited by the constitutional definitions of “supply” and “service.” The judicially established requirement of two distinct entities for taxation could not be overridden by statutory redefinition without constitutional amendment.
  8. What was the significance of distinguishing Navnit Lal C. Javeri v. K.K. Sen?
    In Navnit Lal, the Supreme Court allowed a statutory fiction to treat loans as dividends because “income” was not judicially restricted. The Kerala High Court distinguished this, noting that “supply” and “service” have a judicially established constitutional meaning requiring two entities, making the GST amendments’ redefinition unconstitutional.
  9. What reliefs were granted to the IMA?
    The Court allowed IMA’s Writ Appeal (W.A. No. 1659/2024), struck down the impugned provisions, and granted consequential reliefs, exempting IMA’s mutual benefit schemes (e.g., Social Security Schemes, Professional Disability Support Scheme) from GST liability.
  10. What broader impact does this judgment have on GST taxation?
    The judgment reinforces the doctrine of mutuality in the GST regime, limiting the legislature’s ability to tax transactions between associations and members without constitutional amendments. It also protects taxpayers from unfair retrospective taxation and underscores the supremacy of judicially interpreted constitutional terms over statutory redefinitions.
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