⚖️ Introduction: Is GST Applicable to Medical Councils?
In a case that could shape GST interpretation for statutory regulatory bodies, the Gujarat High Court has stayed coercive action by the GST department against five major medical councils and boards in the state. These bodies, responsible for licensing and regulating medical professionals, had been served notices under Section 74 of the CGST Act, alleging tax liability on the services they render in exchange for fees.
🧵 Case Overview: Statutory Bodies v. GST Intelligence
The Director General of GST Intelligence (DGGI) initiated action against the following bodies:
- Gujarat Medical Council
- Gujarat State Dental Council
- Council of Homeopathic System of Medicine
- Gujarat Board of Ayurvedic and Unani System of Medicine
- Gujarat State Council for Physiotherapy
GST Department’s Argument:
- These bodies collect fees for registration, issuance of licenses, and other services.
- They possess GSTINs, and function as body corporates.
- As such, they provide taxable services and fall within the purview of GST under Section 7 read with Schedule II of the CGST Act.
Petitioners’ Argument:
- The councils are statutory bodies, not private corporates.
- They function as extensions of the government under respective state laws.
- Their role is regulatory, not commercial, and hence non-taxable under GST law.
🧑⚖️ HC Order: Interim Protection for Councils
The bench comprising Justice Bhargav Karia and Justice D N Ray took cognizance of the petitions and issued the following interim directions on March 21, 2025:
- No coercive action shall be taken by the GST authorities until the next hearing.
- A reply must be filed by the GST department before May 1, 2025.
📝 Key Reference: Writ Petitions filed under Article 226 of the Constitution of India challenge the taxability status of statutory councils.
📚 Legal Context: What Do Previous Judgments Say?
Several precedents weigh in favor of statutory bodies:
- Supreme Court in Indian Medical Association v. Union of India (2020)
Held that statutory professional bodies discharging regulatory functions are not business entities under the traditional tax definition. - Calcutta HC in Institute of Cost Accountants v. UOI (2022)
Observed that mere collection of fees does not convert regulatory action into a commercial service.
However, Schedule II of the CGST Act includes “grant of rights and licenses for a fee” as taxable unless specifically exempted—creating grey areas when applied to public bodies.
📖 Government Perspective: Clarification Needed
The absence of a clear GST exemption for statutory regulators under Notification No. 12/2017 – Central Tax (Rate) adds to the confusion.
The GST Council, SEBI, and the Law Ministry may need to issue clarifications if this case escalates to the Supreme Court, as it has pan-India implications for the regulation of professions.
🧾 Final Take: A Case That May Reshape Professional Regulation
The Gujarat HC’s interim relief is just the beginning. As India builds its tax ecosystem, defining what constitutes a taxable person remains a sensitive and complex question—especially when regulatory and commercial functions blur.