The Directorate General of Goods and Services Tax Intelligence (DGGI) recently informed the Kerala High Court that the Kerala wing of the Indian Medical Association (IMA) has tax dues to the tune of Rs 50 crore. The Kerala chapter of the association had recently moved the Kerala High Court challenging the DGGI’s move to include IMA under the ambit of GST.
The DGGI, in its counter affidavit filed before the HC, has stated that based on intelligence gathered, the IMA-Kerala has collected around Rs 280 crore through various schemes in the last six years. However, the IMA has refuted the allegations and said that the DGGI had not notified them of the tax debt.
The IMA plea said "respondents have not issued any show cause notice till date stating how and in what manner the petitioner may be liable; no demand has been proposed, nor has there been quantification of any liability. While so, details are sought regarding immovable properties of the association apparently with a view to provisionally attach petitioner's properties."
The Kerala High Court commenced hearing of the matter on Thursday, July 6. The next hearing has been scheduled for July 11. The counsel of the IMA informed the court that the allegations levelled by DGGI were baseless and the matter should have been informed to the association formally.
The issue dates back to November 2022, when the Kozhikode Regional Unit of DGGI conducted an inspection at the IMA premises and issued summons to secretaries of various schemes. The IMA runs schemes such as social security scheme, pension scheme, etc for its members. The DGGI alleges that IMA failed to pay the GST pertaining to the funds received as membership subscriptions, member admission fee and for these schemes. The IMA refuted the allegations and categorically stated that the activities of the association was not service or goods oriented, but on a charitable basis for members and their families.
The IMA had then submitted all the records about funds and accounts to the DGGI in December 2022, and later sent a letter stating that they were under the belief that GST was not attracted as they are “a mutually self-help and charitable organisation”. On June 19, IMA had applied for GST registration and informed the same to DGGI, and on June 23, the latter sent a notice to the IMA seeking details of immovable properties of the association.
Speaking to TNM, IMA’s state secretary Dr Joseph Benaven said that they approached the court as per the advice of their counsel. “As we were advised that this was an unusual move by the DGGI, we approached the court as they might provisionally attach the properties, which means based on assumption. If it is done, it will bring disrepute to the association,” he said and added that the move of DGGI was unjustifiable. He also said that no quantifiable communication was made with regard to tax debt.
In response to this petition, the DGGI filed a counter affidavit saying that IMA Kerala and its institutions are found to be engaged in “business venture” and the fee they collect as part of the association membership and for other services falls under the ambit of “business”, making them liable to pay GST. Regarding their request seeking details of immovable properties, the DGGI said the IMA had not disclosed a list of properties owned by them in Income Tax returns. It also said that the petition was premature as the investigation is ongoing and there was no action taken. Counsel of the IMA sought time at the court to file a rejoinder in response to the counter-affidavit.