Case: ALL INDIA HAJ UMRAH TOUR ORGANIZER ASSOCIATION MUMBAI Vs. UNION OF INDIA &amp; ORS

2. The Haj pilgrimage is undertaken by thousands of pilgrims from India, either through the Haj Committee of India (for short, the Haj Committee) or HGOs. There is a bilateral treaty between India and the Kingdom of Saudi Arabia. As per the said bilateral arrangement, the Haj pilgrimage can be undertaken from India only through the Haj Committee or HGOs.3. The service tax regime was introduced in India in the year 1994 under the provisions of the Finance Act, 1994 (for short the Finance Act). Initially, very few services were made subject to payment of service tax. However, by subsequent Finance Acts, a large number of services were added to the list from time to time. The total number of services subjected to service tax exceeded 100. A negative list regime was introduced by Act No.23 of 2012 with effect from 1st July 2012. By Act No.23 of 2012, Sections 66-B and 66-C were added. Section 66-B is the charging Section which provided that there shall be a levy of service tax at the rate of 12% on the value of all services other than those specified in the negative list. By amending Section 66-B, the percentage of service tax was enhanced to 14%. Section 66-C confers power on the Central Government to frame rules for determining the place where such services are provided or deemed to have been provided or agreed to be provided or deemed to have been agreed to be provided. Accordingly, the Place of Provision of Services Rules, 2012 (for short, the 2012 Rules) were framed which came into force with effect from 1st July 2012. On 20th June 2012, Mega Exemption Notification no.25 of 2012–ST (for short, the Mega Exemption Notification) was issued containing several exemptions. Paragraph 5(b) of the Mega Exemption Notification provided for the exemption on services by a person by way of conduct of any religious ceremony. Paragraph 5A of the Mega Exemption Notification provided for the exemption to services by specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External Affairs of the Government of India, under bilateral arrangement. The Mega Exemption Notification defines specified organisations as Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking and the Committee or State Committee as defined in Section 2 of the Haj Committee Act, 2002 (for short, the 2002 Act). With effect from 1st July 2017, under the provisions of the Integrated Goods and Services Tax Act, 2017 (for short, the IGST Act), the same service tax regime was continued. Identical exemption notification dated 28th June 2017 (for short, the IGST Exemption Notification) was issued by exercising the powers under the IGST Act. Identical Exemption Notification was also issued on the same date (for short, the GST Exemption Notification) under the Central Goods and Services Tax Act, 2017 (for short, the GST Act).4. Some of the HGOs and PTOs filed petitions in this Court to challenge the levy of service tax on the service regarding the Haj pilgrimage. By the order dated 11th December 2019 passed in Writ Petition (C) No.977 of 2014, this Court directed the petitioners to make a representation to the Government of India for grant of exemption from service tax. Accordingly, a detailed representation was made by some of the petitioners on 19th December 2019. The GST Council by the order dated 14th March 2020, rejected the representation on the basis of the recommendation of the Fitment Committee. The said decision was communicated by the Government of India by a letter dated 5th May 2020.5. Most of the writ petitions in the current batch of petitions have been filed by various organisations representing HGOs/PTOs. Only one petition, i.e. Writ Petition (C) No.1329 of 2020, has been filed by an individual petitioner who desires to undertake the Haj pilgrimage. Most of the petitions challenge the aforesaid orders rejecting representations. In some of the petitions, a declaration has been claimed that the provisions of the laws relating to service tax are not applicable to services rendered by HGOs and PTOs to Hajis for performing the religious activity of Haj/Umrah. In some of the petitions, there is a challenge to the validity of Rules 8 and 14 of the 2012 Rules. However, submissions have not been canvassed on the issue of validity.6. Counter Affidavits have been filed in Writ Petition (C) Nos.755, 856 and 896 of 2020, which have been treated as common affidavits in this group of petitions.7. At this stage, we may note here that in this batch of petitions, we are not dealing with the issue of extra-territorial operation of the service tax regime, as the said issue is pending for adjudication before another Bench.

Reasoning:
36. In these petitions, we are concerned with HGOs or PTOs. It is, therefore, necessary to understand the nature of services provided by HGOs/ PTOs. Haj pilgrimage is a five-day religious pilgrimage to Mecca and nearby Holy places in Saudi Arabia. As per the Holy Quran, all Muslims who are physically and financially sound must perform the Haj pilgrimage at least once in their lives. As provided in Holy Quran, the Haj pilgrimage is one of the five pillars or duties of Islam. Haj takes place only once a year in the twelfth and final month of Islamic lunar calendar. Pilgrimage undertaken to Mecca at other times is known as Umrah. During the five days of Haj, the pilgrims are required to perform a series of rituals, the details of which are not relevant for deciding the issues involved in these petitions.37. To enable Haj pilgrims of India to undertake Haj pilgrimage, there is a bilateral agreement executed every year between the Kingdom of Saudi Arabia and the Government of India. As per the bilateral agreement, a quota of number of pilgrims is assigned to India. Out of the said quota, normally only 30% is allocated to HGOs. The rest of the quota is made available to the Haj Committee.38. HGOs render services to Haj pilgrims by purchasing flight tickets, arranging and making payments for accommodation in Saudi Arabia, arranging and making available food during their stay in Saudi Arabia, arranging and making payments for transportation in Saudi Arabia and providing foreign exchange in the form of Saudi Riyals. As stated in the written submissions filed by Shri Arvind P. Datar, the learned senior counsel, all Muslim devotees who wish to undertake the Haj pilgrimage have to register themselves with Tawafa establishment in Saudi Arabia. As soon as Haj pilgrims land in Kingdom of Saudi Arabia, their entire movement is controlled by Tawafa establishment and its agents known as Maollims. Similar kinds of services are provided by Haj Committee to those pilgrims who undertake Haj pilgrimage through Haj Committee. As pointed out by Shri Gopal Sankaranarayanan, the learned senior counsel, HGOs provide better accommodation at a place near Kabah and also arrange for food. However, the Haj Committee provides accommodation at far away places without the facility of catering. The 2012 Rules have a direct connection with liability to pay service tax as the said Rules decide the place of provision of a service. Apart from the definitions of location of the service provider and location of the service receiver under Clauses (h) and (i) of Rule 2, Rules 3, 4, 7, 8 and Rule 9 of the said Rules of 2012 are also relevant.39. The provisions of the 2012 Rules and the relevant provisions of IGST Act are to a great extent pari materia. As far as the location of service provider in this case (HGOs) is concerned, there is no dispute that all of them have to be registered under Rule 4 of the Service Tax Rules, 1994 and therefore, as per sub-clause (a) of clause (h) of Rule 2, the location of HGO will be the premises for which registration has been granted to HGO. Such premises are necessarily in India. Even assuming that any other sub-clauses of clause (h) are applicable, the location of the service provider, in this case, will be in India. As far as the location of service receiver under clause (i) of Rule 2 is concerned, in this case, the service receiver is the Haj pilgrim who is obviously not registered. Therefore, sub- clause (a) of clause (i) will have no application. There are four categories listed in sub-clause (b) of clause (i) of Rule 2. The first category is of business establishments. The second category is of services which are used at a place other than the business establishment. The third category is where services are used at more than one establishment. On the face of it, the cases of Haj pilgrims undertaking the Haj pilgrimage through HGOs will not be covered by these three categories. What is applicable to them is the fourth category which is the usual place of residence of the recipient of service. It is not the place where the service recipient receives service or is rendered service. It is the place of ordinary residence of the service recipient which, in this case, will be in taxable territory. As provided in Rule 3, the place of provision of service is the location of the recipient of service. In this case, the recipients of service from HGOs are Indian residents and accordingly, their place of residence in India will be the place of provision of service. Rule 8 provides that where the location of the provider of service as well as that of the recipient of service is in the taxable territory, the place of provision of service is the location of the recipient of service. Hence, in this case, the place of provision of service is the location of the service receiver in accordance with clause (i) of Rule 2 which will be in taxable territory.40. However, reliance was sought to be placed by the petitioners on Rule 4, in particular Clause (b) thereof. Rule 4 is applicable to performance based service which provides that the place of provision of two services set out in the said Rule shall be the location where services are actually performed. Clause (a) of Rule 4 is applicable to services provided in respect of goods which obviously will not apply in the present case. The petitioners are relying upon clause (b) of Rule 4. The title of Rule 4 suggests that it is applicable to performance based services. HGOs do not render performance based services looking to the nature of the services they render, which we have discussed above in detail. Therefore, Clause (b) of Rule 4 will not apply to HGOs. What will apply is Rule 3 which will mean that the place of provision of the service shall be the location of the recipient of service in accordance with Rule 2(i)(b)(iv). Thus, service is rendered by HGOs to the Haj pilgrims within taxable territory. That is how the charging section will apply.Religious ceremonies and religious functions are not covered by Rule 6. The words similar events will have to be construed ejusdem generis. Hence, the Haj pilgrimage cannot be an event.42. Even if we assume that the service rendered by HGOs to Haj pilgrims is transportation service, by virtue of Rule 9 of the 2012 Rules, the place of provision of service will be the location of service provider. In view of sub-Section (10) of Section 12 of the IGST Act, the place of supply of service will be the place where the passenger embarks.43. As per Item (iv) of sub-clause (b) of Clause (i) of Rule 2 of the said Rules of 2012, the location of the service receiver will be the usual place of residence of the Haj pilgrim in India. Therefore, the service rendered by the HGOs to Haj Pilgrims is taxable for service tax as the service to Haj pilgrims is provided or agreed to be provided in taxable territory. The service is rendered by providing or agreeing to provide Haj pilgrimage tour package.44. We may reiterate here that as prayed by the parties during arguments, we are not going into the issue of extra-territorial operations of the laws relating to service tax and the said issue is left open. Even the issue of the validity of the 2012 Rules has not been seriously canvassed at the time of oral submissions. In one of the writ petitions, the ground of violation of Article 25 of the Constitution of India has been taken without making even an attempt to substantiate the same.The said decisions apply to the fact situation before 1st July, 2012 when negative tax regime was not in force. We are concerned in these cases with the negative service tax regime which commenced from 1st July 2012. Therefore, the same will not apply to these cases.As mentioned earlier, the Exemption Notifications under the IGST and the GST Acts so far as the Haj pilgrimage is concerned, are pari materia with the Mega Exemption Notification. It is, therefore, necessary to advert to the Mega Exemption Notification. The Mega Exemption Notification contains a list of services which are exempted from service tax leviable under Section 66B.47. Ex facie, Clause 5A will have no application as it is applicable to services by specified organisations in respect of a religious pilgrimage facilitated by the Ministry of External affairs of the Government of India under bilateral arrangement. The specified organisations have been defined in paragraph 1(1)(a)(zfa) of the Mega Exemption Notification. Specified organisations, as stated therein, are only two categories of organisations. The first one is Kumaon Mandal Vikas Nigam Limited, a Government of Uttarakhand Undertaking and Haj Committee or State Committee under the said Act of 2002. The Haj Committee renders services in relation to the Haj pilgrimage which is facilitated by the Ministry of External Affairs of the Government of India under the bilateral arrangement with the Kingdom of Saudi Arabia.In the case of Government of Kerala & Anr. v. Mother Superior Adoration Convent 2021 (5) SCC 602  relied upon by Shri Datar, this Court referred to its decision in the case of Commissioner of Customs (Preventive) Mumbai v. M. Ambalal and Company 2011 (2) SCC 74  and held that the law laid down in the case of M. Ambalal and Company 2011 (2) SCC 74  has not been disturbed by the Constitution Bench in the case of Dilip Kumar and Company 2018 (9) SCC 1 . In paragraph 23, this Court in the case of Mother Superior Adoration Convent 2021 (5) SCC 602  held thus:23. Likewise, even under the Customs Act, this Court in Commr. of Customs v. M. Ambalal & Co. [Commr. of Customs v. M. Ambalal & Co., (2011) 2 SCC 74]  made a clear distinction between exemptions which are to be strictly interpreted as opposed to beneficial exemptions having as their purpose—encouragement or promotion of certain activities. This case felicitously put the law thus follows : (SCC p. 80, para 16)16. It is settled law that the notification has to be read as a whole. If any of the conditions laid down in the notification is not fulfilled, the party is not entitled to the benefit of that notification.The rule regarding exemptions is that exemptions should generally be strictly interpreted but beneficial exemptions having their purpose as encouragement or promotion of certain activities should be liberally interpreted. This composite rule is not stated in any particular judgment in so many words. In fact, majority of judgments emphasise that exemptions are to be strictly interpreted while some of them insist that exemptions in fiscal statutes are to be liberally interpreted giving an apparent impression that they are contradictory to each other. But this is only apparent. A close scrutiny will reveal that there is no real contradiction amongst the judgments at all. The synthesis of the views is quite clearly that the general rule is strict interpretation while special rule in the case of beneficial and promotional exemption is liberal interpretation. The two go very well with each other because they relate to two different sets of circumstances.Thereafter, in paragraph 25, this Court referred to and quoted the relevant portion of the Constitution Bench decision in the case of Dilip Kumar and Company 2018 (9) SCC 1 . In paragraphs 26 and 27, this Court proceeded to hold thus:26. It may be noticed that the five-Judge Bench judgment [Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1]  did not refer to the line of authority which made a distinction between exemption provisions generally and exemption provisions which have a beneficial purpose. We cannot agree with Shri Guptas contention that sub silentio the line of judgments qua beneficial exemptions has been done away with by this five-Judge Bench. It is well settled that a decision is only an authority for what it decides and not what may logically follow from it (see Quinn v. Leathem [Quinn v. Leathem, 1901 AC 495 (HL)] as followed in State of Orissa v. Sudhansu Sekhar Misra [State of Orissa v. Sudhansu Sekhar Misra, (1968) 2 SCR 154  : AIR 1968 SC 647 ] , SCR at pp. 162- 63 : AIR at pp. 651-52, para 13).27. This being the case, it is obvious that the beneficial purpose of the exemption contained in Section 3(1)(b) must be given full effect to, the line of authority being applicable to the facts of these cases being the line of authority which deals with beneficial exemptions as opposed to exemptions generally in tax statutes. This being the case, a literal formalistic interpretation of the statute at hand is to be eschewed. We must first ask ourselves what is the object sought to be achieved by the provision, and construe the statute in accord with such object. And on the assumption that if any ambiguity arises in such construction, such ambiguity must be in favour of that which is exempted. 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.51. 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.52. 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 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 respect of a religious pilgrimage. Whereas, sub-Clause (b) of Clause 5 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 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 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 Convent 2021 (5) SCC 602 .According to us, this submission is completely fallacious. The 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 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 Saudi Arabia, arranging for foreign exchange and arranging registration with Tawafa establishment in the Kingdom of Saudi Arabia.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.55. 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. 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 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.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 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 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.58. 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 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 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. 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. 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 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 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 pilgrims. Except for the stringent conditions for the registration, the Government has no control over HGOs.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 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 profit while providing a package to Haj pilgrims. They are rendering the services with the object of earning profit.60. Thus, the Haj Committee is a statutory committee which is entrusted with various functions for the welfare of Haj pilgrims. Moreover, 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.61. The learned senior counsel relied upon the decision of this Court in the case of S. K. Dutta 1968 (2) SCR 165. 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 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.63. Strong reliance was placed by the Revenue on the decision of this Court in the Case of M. Jhangir Bhatusha & Ors 1989 Suppl. (2) SCC 201 . The subject of this petition was an order passed by the Government under sub-Section (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 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 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.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 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 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 material before us is not sufficient to warrant any conclusion in their favour.64. We are tempted to quote what the majority view in the case of R. K. Garg v. Union of India & Ors. 1981 (4) SCC 675  on the approach of the Court in such matters. We quote paragraph 8:8. 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 (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, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry.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. 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.65. Hence, we are of the considered view that the arguments 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.