Indian Medical Association, Kerala State Branch v. Union of India and Others

01 · Facts of the case and issues

IMA Kerala operated member-funded social-security, disability, professional-protection, health and other welfare schemes. Doctors paid admission fees, subscriptions and event-linked contributions; separately managed and audited funds supported members and, under some schemes, their families. DGGI summons sought GST-registration and financial records for 2017–18 to 2021–22. IMA apprehended coercive recovery and invoked mutuality.

The challenge covered Sections 2(17)(e), 7(1)(aa) and its Explanation in both CGST and Kerala GST legislation. The latter deem association-member transactions to occur between separate persons, retrospectively from 1 July 2017. The Single Judge’s 23 July 2024 judgment upheld the provisions but rejected retrospectivity. IMA appealed the validity ruling; Union officials and Kerala separately appealed the retrospective-relief ruling. The central issue was legislative competence to tax these mutual services through ordinary statutory deeming provisions.

In its submissions, IMA identified a 2 August 2024 notice proposing Rs. 45.32 crore in GST, plus interest and penalties, and an earlier 18 August 2023 notice proposing Rs. 2.71 crore as GST on membership fees, plus interest and penalties. These were proposed demands recorded in argument, not tax amounts adjudicated by this appellate judgment.

Source: Original physical pp. 7–13, paragraphs 1–6; pp. 40–41, paragraphs 11–12. Proposed notices: p. 21, paragraph 8(D), counsel’s submissions.

02 · Discussion and reasoning of the Hon’ble Court

The Division Bench accepted that legislatures can ordinarily remove the basis of earlier judgments through validating legislation. It distinguished that power from enlarging a taxable event beyond the Constitution’s grant. Reading Articles 246A and 366(12A), it understood supply and service to require a provider and a recipient, excluding mutual self-supply or self-service.

The Court drew on Ranchi Club as approved in Calcutta Club, and treated the established meaning of mutuality as informing the constitutional GST framework. It held that an ordinary statute could not assign a constitutionally delimited expression a wider, inconsistent meaning. It further reasoned that changing supply alone had not created a corresponding deemed service between an association and its members.

Revenue argued that GST rested on a new constitutional power and that the amendment validly removed the earlier mutuality decisions’ basis. The Bench rejected that answer in this constitutional setting.

The Bench distinguished Navnit Lal C. Javeri and Skill Lotto: those decisions permitted broad definitions consistent with the relevant constitutional field, rather than contradictory enlargement of a concept already judicially defined. Fiscal-legislation latitude could not cure the lack of competence identified here.

Having invalidated the provisions, the Court said deciding retrospectivity was unnecessary. It nevertheless agreed with the Single Judge: retrospectively imposing indirect tax where recipients had not been charged and the levy had not been anticipated offended fairness, without sufficient State justification. These observations supplement the principal competence holding; the judgment is not confined to retrospective operation.

Source: Revenue submissions: original pp. 26–39, paragraphs 9–10. Court reasoning: pp. 39–50, paragraphs 11–23, especially 13–17 and 22–23; pp. 50–51, paragraph 24.

03 · Judicial decision and operative relief

Sections 2(17)(e), 7(1)(aa) and the Explanation thereto of both the CGST and KGST Acts were declared unconstitutional and void, ultra vires Article 246A read with Articles 366(12A) and 265. W.A. 1659/2024 was allowed with consequential reliefs; W.A. 1487/2024 and W.A. 468/2025 were dismissed, without costs.

The operative conclusion does not quantify a refund, direct a particular repayment deadline, or separately enumerate the disposal of each show-cause notice. Do not substitute such relief for the Court’s actual order. Subsequent Supreme Court proceedings and their limited interim terms are detailed below.

Source: Original p. 50, paragraph 23; p. 51, unnumbered operative conclusion following paragraph 24.

04 · In favour of

The association succeeded on the statutory-validity challenge. This was a merits determination, not a remand. Supreme Court leave and recovery protection do not themselves affirm or reverse that determination.

Source: Original paragraphs 23–24 and p. 51 conclusion; Supreme Court orders dated 25 July 2025, 8 December 2025 and 15 May 2026.