Kerala HC: Indian Medical Association v. UOI and Ors. [2025:KER: 30517]
Background:
The petitioner challenged the constitutional validity of Section 2(17)(e), Section 7(1)(aa), and its Explanation – treat transactions between clubscor associations and their members as ‘supply’ under GST considering the principle of mutuality where the person cannot make supply to themselves. The Petitioner contended that the aforementioned provisions are ultra vires and goes beyond powers provided under Article 246A and is in conflict with the definition of ‘goods and services’ under Article 366(12A), and also violative Article 265, which states that no tax can be collected without the authority of law.
Decision:
The Hon’ble HC held that supply requires atleast two different persons i.e. a supplier and a recipient. Self-supply or self service like a club with its own members transacting with themselves is not envisioned as “supply” under the constitution.
The 46th Constitutional Amendment, 1982 introduced a deeming provisions under Article 399(29A) to treat certain transactions between associations and their members as sales. In contrast, the CGST Act and KGST Act were amended to treat activities between a club and its members as ‘supply’, just by changing the definition of “supply” without amending the Constitution or redefining the term “service”
The Court found that this approach goes beyond the powers given in the Constitution, particularly Article 246A, Article 366(12A), and Article 265, because the law tries to impose tax on transactions that constitutionally cannot be treated as a supply or service. Therefore, the court held that these provisions of the CGST/KGST Act are unconstitutional, invalid, and void.
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