Indian Medical Association v. Union of India & Ors.
W.A. Nos. 1659, 1487 & 468 of 2024 | Judgment dated 11 April 2025
The Kerala High Court has allowed the writ appeal filed by the Indian Medical Association (IMA), Kerala State Branch, setting aside the judgment of the Single Judge that had upheld GST levy on services provided by associations to their own members.
Key Highlights:
- The Court struck down the retrospective amendment introduced through Section 7(1)(aa) of the CGST Act, inserted by the Finance Act, 2021, which had sought to nullify the principle of mutuality.
- The amendment had deemed services rendered by a club or association to its members to be a taxable “supply”, retroactively from 01.07.2017.
- The Division Bench held that such deeming fiction violates the constitutional understanding of the term supply under Article 366(12A) and the powers under Article 246A.
Significant Observations:
“… the decision of the Supreme Court in State of West Bengal v. Calcutta Club Ltd. is authority for the proposition that the principle of mutuality has survived under the Constitution even after the 46th Amendment. If that be so, then the amendment exercise carried out by the Parliament would itself have to be seen as unconstitutional, since it incorporates a definition of supply that militates against the constitutional understanding of the term.”
Impact:
- This ruling effectively restores the exemption from GST for services provided by associations or clubs to their own members, reaffirming the doctrine of mutuality.
- It raises critical questions on the legislative competence of Parliament in using retrospective tax amendments to override judicial precedents without constitutional backing.