EMPEROR Akbar, often referred to as the greatest of all Mughals, faced a series of arguments from his clerics after he decided to abolish Jizya, a tax imposed on non-Muslims. Akbar’s rationality was taken to task for his efforts to maintain the diversity of the nation.
The Supreme Court of India stands on similar ground at present facing “rational” arguments from the government at the Centre on the writ petition filed Tirumala Tirupati Devasthanams (TTD).
The Revenue Department of the government had sought to levy tax on the TTD for the services it provides to the pilgrims. In mid-February this year, the Supreme Court had issued notice to the Centre on the plea, where the TTD challenged the constitutional validity of the decision. The TTD also questioned the jurisdiction of the Union Finance Ministry and its agencies to apply and levy service tax on the accommodation provided by the TTD to pilgrims visiting the holy shrine. The facilities which are necessary to make pilgrimage convenient have been subjected to such levy.
The government has cited provisions under Sections 65(105) (zzzzw) and 66E to levy service tax on TTD, even though the TTD does not collect the same from the pilgrims. It only charges for accommodation and other services.
The loosely used definition of ‘accomodations’ under Sections 65(105) (zzzzw) and 66E has been cited by thegovernment to make non-commercial accommodation and facility of other civic amenities provided by TTD to religious pilgrims a “taxable service” for the period 01.05.2011 to 30.06.2012. The impugnedprovision Section 65 (105) (zzzzw) of the Finance Act, 1994 reads:: ” …65(105) “taxable service” provided [or to be provided] (zzzzw) to any person by a hotel, inn, guest house, club or campsite, by whatever name called, for providing of accommodation for a continuous period of less than three months.”). The impugned 66E reads: “66E Declared services- The following shall constituted declared services, namely- (a) renting of immovable property;…”)
Levy of service tax on “accommodation” by TTD is ultra vires the constitutionally guaranteed Fundamental Right to practice religion
The TTD has argued that the government cannot levy service tax on “accommodation” and such other facilities provided by TTD because it violates the fundamental right to practice one’s religion. The levy of such tax amounts to curtailment of such freedom, it has further argued. Practicing religion cannot be taxed as has been stated under the Article 27 of the Constitution.
The TTD also challenged the constitutional validity of Sections 65 (105) and 66 B of the Act, which impose service tax on facilities, saying these were incidental andintegral to provision of basic amenities to pilgrims. “The incomes generated from rent/lease/licence fees… are all used for maintenance of the premises and for developing more and better facilities. There are no private holdings at Tirumala, and even in Tirupati, amenities are provided near all major temples, and choultries/rest houses are offered to pilgrims at very reasonable rates.”
The petition said the TTD was not engaged in any commercial activity and was merely performing duties as mandated under the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1987. Besides, the purpose and objective of providing accommodation to the pilgrims by TTD has previously been considered and decided by the apex court in Municipal Council Tirupati v. TTD(1974) 1 SCC 683.
As “Local Authority” TTD is performing statutory function when it offers such “Accommodation”
The TTD is a local authority and is dutybound to provide accommodation under the Andhra Pradesh Charitable and Hindu Religious Institution and Endowments Act, 1987. As millions of pilgrims seek accommodation, there are no lodging houses in Tirumala Hills for long or permanent stay. Pilgrims come only forworship, the TTD has argued, further stating that accommodation is given only to pilgrims. It is, therefore, not a commercial activity.
The levy is on taxable service as defined in the Act which is on a commercial activity and not on an activity of a religious nature. And Section 65(105) (zzzzw) will not cover such activity for the period prior to 1.07.2012, the petition states. Besides TTD’s “services” are a part of its functions as a local authority which are performed as part of its administrative duties which in turn cannot be taxed.
It is important to note that service tax is a tax on commercial activities as was held in All India Federation of Tax Practitioners &Ors. Vs. Union of India 2007(7) SCC-527 and reaffirmed in Association of Leasing &Financial Services Co. Vs. Union of India reported in 2011(2) SCC-352). The impugned definition runs contrary to the nature of service tax being levied only oncommercial activities by giving a very wide definition which encroaches upon religious freedom guaranteed under the Constitution. Various provisions of service tax provisions exempt religious activities from it. The scheme of service tax reflects legislative intent in exempting religion from being taxed. Service tax is like VAT — it is destination based consumption tax, in the sense, that it is on commercial activities and is not a charge on the business but on the consumer (held in: 2007 (7) SCC 527 at 536).
Akbar “founded a dynasty which flourished to long as it adhered to his system, and which began to decay only when it departed from one of its main principles, the principle of toleration and conciliation,” wrote G.B. Malleson in his book titled “Akbar and Rise of the Mughal Empire” (page 9). Here, Malleson was referring to none other than Aurangzeb who, through his policy of religious intolerance, antagonized almost all the significant constituents of the society whether Rajputs, Sikhs, Marathas or Jats. Thereby, singlehandedly and principally he prepared the ground for the downfall of the Empire.
“Akbar’s ambition was to gather the diverse peoples of the subcontinent under his benevolent wings, to enable them, through religious and cultural syncretism, to live in peace and amity. In this vision, and in his intellectual openness and rationalism, this sanguinary medieval autocrat was a thoroughly modern man, ahead of his time, and in some ways ahead even of our time,” wrote Abraham Eraly in his book titled “Emperors of the Peacock Throne” about Akbar’s understanding of the fundamental principle on which this great nation may be kept together.
Therefore, it is for the nation to choose which path it wants to take i.e., the path of toleration and conciliation adopted by Akbar, approved and implemented by the Constitution of India or to repeat the mistakes committed by Aurangzeb.
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