The Supreme Court of India on July 25 issued a notice to the Indian Medical Association (IMA) on a plea filed by the Union Government challenging a judgment of the Kerala High Court. The High Court had struck down certain provisions of the Central Goods and Services Tax Act, 2017 (CGST Act) that allowed the levy of GST on services provided by clubs and associations to their own members.
"There shall not be any recovery steps against the Indian Medical Association," the Supreme Court ordered during the hearing.
A bench of Justice PS Narasimha and Justice AS Chandurkar passed the order, while Additional Solicitor General N Venkataraman appeared for the Centre. Senior Advocate Arvind Datar, appearing for the IMA, requested the court to ensure there is no retrospective recovery, a request that was accepted by the bench.
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Background of the Case
The legal dispute began when the IMA challenged the demand for GST on services it provided to its own members, such as medical education, training, or conferences. The association cited the principle of mutuality, arguing that a club or association and its members are the same entity, so their internal transactions cannot be taxed.
However, this changed when the Finance Act, 2021, amended the GST laws, specifically Section 2(17)(e) and Section 7(1)(aa) of both the CGST Act and Kerala GST (KGST) Act, with retrospective effect from July 1, 2017. These changes made it clear that services provided by clubs to members would be treated as 'taxable supplies'.
The IMA filed a writ appeal against the retrospective tax demand. A division bench of the Kerala High Court, comprising Justice Dr Jayasankaran Nambiar and Justice S Easwaran, ruled in favour of the IMA.
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“The provisions of Section 2(17)(e), Section 7(1)(aa), and their Explanation under CGST and KGST Acts are unconstitutional and void,” the High Court declared.
The Court reasoned that these provisions violated the definition of "supply" under Article 246A of the Constitution, and thus were ultra vires (beyond legal authority) of the Constitution.
Additionally, the High Court strongly objected to the retrospective application of the law:
"Altering the basis of taxation with retrospective effect, when parties have not anticipated such levy, is against fairness and the rule of law," the Court held.
While the Kerala High Court’s judgment still stands, the Supreme Court’s notice means the legal battle is far from over. The Centre has challenged the judgment, and the apex court will now decide the validity of levying GST on club-member transactions.
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For now, the Court has granted relief to the IMA by staying any recovery action, especially for the retrospective period, until further orders.
Case Details: UNION OF INDIA Vs INDIAN MEDICAL ASSOCIATION|SLP(C) No. 18349-18350/2025