Thiruvananthapuram: The Directorate General of GST Intelligence (DGGI) has submitted additional evidence before the Kerala High Court to show that the Indian Medical Association (IMA), an organisation of allopathy doctors, is not a charitable organisation but a corporate entity involved in product endorsement, land deals, and profit generation.

After a series of investigations into IMA activities since November 2022, the DGGI pulled up the doctors' body for non-payment of Goods and Services Tax (GST) in June 2023. According to the DGGI, more than 90 per cent of IMA's activities are non-charitable. It wants the IMA brought within the GST net.

The IMA, in turn, had invoked the 'principle of mutuality', which essentially means no person can transact with oneself. In other words, the IMA calls itself an association/club that was formed exclusively for its members, and therefore exempt from tax. Those who pay and those who benefit are doctors.

"There is identity between the contributors and the participants (all are doctors) – consequently, per the established doctrine of mutuality there can be no service by one person to another," the IMA says in the writ petition it filed in the High Court last year.

The Union Government has now sought to dismantle IMA’s "mutuality" argument in the High Court. "Many of its activities deviate from the principle of mutuality," said an affidavit filed by the DGGI deputy director before the High Court on February 27. The affidavit stated that various activities of the IMA were in the form of commercial transactions that involved non-members.

Charitable liquor sales
One example was a liquor bar owned by the IMA Cochin Charitable Society at Palarivattom selling liquor to outsiders, and non-members. "The IMA's primary objective is to promote public health. Yet, the IMA is running a bar and claims to be a charitable society. What's this, India's first charitable bar?" a top DGGI source said. A receipt for the sale of three beer bottles and a carry bag issued to a non-member was produced in the court.

Another was the renting out of rooms in IMA House to non-members. The DGGI submitted a tax invoice that showed that a room in the IMA House Kochi was billed at Rs 2,300 a day for a non-member, the DGGI deputy director himself.

Money laundering?
The DGGI also produced documents to show that certain profit-making entities of the IMA – IMA PEPS (Professional Equipment and Employment Protection Scheme) and IMAGE (IMA Gone Eco-Friendly) – had transferred funds to the IMA for various activities like the purchase of land and conduct of conferences. (Curiously, the IMA has not disclosed any immovable assets in its Income Tax returns. The affidavit has highlighted this big hole in the IMA's IT returns.)

IMAGE is the biomedical waste treatment and disposal project of the IMA. It processes biomedical waste on a commercial basis and has around 16,000 clients like hospitals and laboratories. IMA PEPS offers private hospitals expert advice on the purchase of medical equipment. Both carry out commercial operations and have profits.

The IMA, however, has not paid tax for amounts received from these corporate entities. "It is like two profit-making Adani Group subsidiaries diverting money to Gautam Adani and the tycoon claiming tax exemption for the money received," the top DGGI source said. "This is money laundering," he said.

Tapping money from water
More seriously, the IMA was found to generate revenues through product branding and product sponsorship. "It engages in partnerships with various companies spanning diverse industries such as LED bulbs, water purifiers, oats, soaps... resulting in a significant financial turnover," the affidavit said.

The DGGI gave two examples of IMA profitably endorsing private brands. One was its association with Kent RO Systems. The affidavit says that the IMA had taken money for its logo to be featured in Kent commercials.

The IMA says it is a project under the IMA Swachh Bharat Swasth Bharat Initiative. In 'IMA Kent Initiative: IMA White paper', a document available on the IMA website, the organisation says why it chose to associate with Kent.

"Based on the available literature and evaluation, IMA found that their purified water not only removes bacteria, and viruses but also dissolved impurities." However, in the very same White paper, the IMA states that it had not conducted an independent study.

It also denied receiving an endorsement fee. But, it says that "IMA did receive voluntary donations from Kent RO group also."

Doctors and wall paint
In another instance, the IMA headquarters in New Delhi had issued an endorsement for Royale Health Shield, an interior paint brand of Asian Paints, on its own letterhead. "Royale Health Shield which contains Silver Ion Technology, has shown anti-bacterial activity through the tests recommended by the IMA," the letter signed by IMA honorary secretary general Dr R V Asokan said.

"IMA is neither a testing nor a certifying authority," the DGGI affidavit said. It also flagged the probability of quid pro quo in such arrangements. "Moreover, such external financial involvement also raises concerns regarding the independence and autonomy of the association," it said.