It would be interesting to examine as to what issues the apex court would weigh to consider the case of the Tirumala Tirupati Devasthanams (TTD) challenging the imposition of service tax on its earnings from the guest houses.
On November 20, a Bench comprising Justice A K Patnaik and Justice H L Gokhale posted the matter to January 29 for final hearing.
The Andhra Pradesh High Court had in its judgment held that such facility provided to the devotees of Lord Venkateswara should
be taken as that provided by a “guest house” mentioned in the definition of the taxable service in section 65 (105) of the Finance Act, 1994.
TTD moved the apex court challenging this verdict. The stand of the TTD is that this taxable service covers only commercial places and not accommodation provided in a religious place like the TTD.
Another of its contention is that only maintenance charges are collected from the pilgrims. Legislature does not intend to levy tax on the activities of religious bodies, the TTD averred in its petition.
The TTD further pointed out that the Income Tax Department had notified the petitioner (TTD) as a trust wholly for public, religious and charitable purposes, having regard to the manner in which the affairs of the petitioner trust are administered and supervised.
What it provides to pilgrims of Lord Venkateshwara is a temporary accommodation lasting not more than two days, the TTD emphasised.
Section 111 of the AP Charitable and Hindu Religious Institutions and Endowments Act, 1987, provides that the funds of the TTD may be utilised for construction and maintenance of choultries and rest houses to be used by pilgrims.
Accordingly, the TTD has constructed choultries and rest houses for providing temporary accommodation to pilgrims during their stay in Tirumala for having the darshan of Lord Venkateswara.
The TTD is not running such a facility on a commercial basis, it added.
The TTD cited a judgment of the apex court delivered in the year 1974 wherein it had held that that choultries meant for temporary accommodation of the pilgrims are run without profit motive.
The legislature has consistently refrained from taxing religious activities as it would affect freedom to practice and propagate religion, guaranteed in the Constitution. This policy is also reflected in the scheme of service tax, the TTD asserted.
The TTD was issued a notice on May 25, 2011, by virtue of the provisions introduced in 2011 as Section 65 (105) in Finance Act, 1994.