SC Admits SLP Challenging Retrospective Tax on Club Services

Case Details: Union of India vs. Indian Medical Association - [2025] 177 taxmann.com 280 (SC) 

Judiciary and Counsel Details

• Pamidighntam Sri Narasimha & Atul S. Chandurkar, JJ.
• N. Venkataraman, A.S.G., Rupesh Kumar, Sr Adv., Gurmeet Singh Makker, AOR, Sarthak Karol, Ishaan Sharma & Nar hari Singh, Advs. for the Petitioner
• Arvind Datar, Sr Adv., Mahesh Agarwal, Rishi Agrawala, Alok Yadav, Renganath, Ms Siddhi Doshi, Advs. & E.C. Agrawala, AOR for the Respondent

Facts of the Case

The petitioner, challenging the retrospective amendments to CGST/KGST by the Finance Act, 2021, submitted that provisions of section 2(17)(e) and section 7(1)(aa) and the Explanation thereto, which deem the supply of services by a Club or Association to its members as a taxable supply, are unconstitutional and void being ultra vires article 246A read with article 366(12A) and article 265 of the Constitution of India. The petitioner contended that the GST levy envisages the existence of at least two persons, a provider and a recipient, before a transaction qualifies as a supply or service, and the amended provisions improperly sought to introduce a concept of deemed supply without constitutional sanction. It was submitted that while the 46th Amendment to the Constitution had specifically amended the definition of ‘sale’ to include certain deemed transactions, the Finance Act, 2021, merely amended the definition of ‘supply’ to include activities or transactions by a person other than an individual to its members for cash, deferred payment, or other valuable consideration, without altering the fundamental concept of service. The petitioner argued that such retrospective deeming provisions do not conform to the constitutional framework and are ultra vires, and accordingly sought relief. The matter was accordingly placed before the Supreme Court with notice issued in Special Leave Petition (SLP).

Supreme Court Held

The Supreme Court held that notice was to be issued in SLP. The Court observed that the notice concerns the challenge to the retrospective amendments. Meanwhile, there should be no recovery of liability so far as respondents are concerned. This direction applies until further orders of the Court.

List of Cases Reviewed

• Indian Medical Association v. Union of India [2025] 173 taxmann.com 474 (Kerala)/[2025] 96 GSTL 532 (Kerala) (Para 1) – Notice Issued