By TIOL News Service

MUMBAI, SEPT 15, 2015: ON scrutiny of ST-3 returns filed by the appellant for half yearly period ending March 2006, it was noticed that an amount of Rs.38,67,671/- was shown as bill for exempted services but no tax was indicated under which exemption was availed.

As the appellant was not forthcoming with the information/documents sought, a SCN dated 16.4.2007 was issued demanding service tax of Rs.3,94,502/-.

Information was also sought for the past period i.e. 16.8.2002 to 30.09.2005 and after a considerable delay the appellant handed Copies of annual accounts for the years ending March 2003 to the year ending March 2006.

It was observed that appellant had not discharged the service tax liability on the amounts received by them for the entire period for the services of aerobics and yoga.

Another SCN dated 19.10.2007, therefore, found its way demanding service tax, interest and penalties for the period 16.8.2002 to 30.09.2005.

Both the notices were adjudicated and the charges were upheld.

The Commissioner(A) did not disturb these findings and so the Citizens' forum is before the CESTAT.

It is submitted that the service tax liability on an amount received by them for providing aerobics and yoga classes would not arise as these services are not for physical well being of any individual and accordingly would not fall under the taxable category of "Health and Fitness Centre". Furthermore, the first SCN was issued on 16.04.2007 for the normal period while the second SCN was issued subsequently on 19.10.2007 invoking extended period and which is legally incorrect; that appellant is a charitable institution; that in the form ST 3, prior to 01.03.2006 there is no requirement of declaring the exempted services rendered and the appellant was under a bonafide impression that the amounts collected by them for aerobics and yoga are not taxable. Case laws relied upon are M.N. Dastur Co. Ltd - 2005-TIOL-187-HC-KOL-ST & Nizam Sugar Factory - 2006-TIOL-56-SC-CX.

The AR rebutted the submissions by placing reliance on the decision in Osho International Foundation Neo Sannyas Foundation - 2015-TIOL-1081-CESTAT-MUM where the Bench has held that meditation course and yoga will fall under the category of "Health and Fitness Services". In the matter of the issuance of the demand notices, it is informed that the appellant had delayed submission of the documents and, therefore, the first show-cause notice was issued in order to cover the period within limitation and the 2 nd show-cause notice was issued within two months of the receipt of the documents and details from the appellant.

After considering the submissions made by both sides, the Bench observed -

Merits:

+ At the outset we find that the merits as to the claim of the learned C.A. for the appellant that the amounts collected for rendering aerobics and yoga classes are not covered under Health and Fitness services is incorrect and is to be rejected and this Bench in the case of Osho International Foundation Neo Sannyas Foundation (supra) has held that meditation course and yoga classes would fall under Health and Fitness services. We find no reason to deviate from such a view already taken by the Tribunal. Accordingly, on merits we find appellant has no case.

Limitation:

++ We find that appellant had not co-operated with the lower authorities and did not produce any documents in order to arrive at the correct service tax liability. The appellant had been claiming that they had indicated the amount in their audited balance sheet which were produced before the lower authorities is also incorrect as they are not in a position to produce the acknowledgement copy of the letters vide which the balance sheets were handed over to the department.

++ We find that the findings of the first appellate authority for invoking extended period is correct and cannot be dislodged by the appellant herein as there is nothing on record that the appellant had informed the lower authorities about the service rendered by them in respect of aerobics and yoga.++ Yet another point which was raised on limitation that the appellant could have carried bonafide impression as ST-3 form which requires indicating the amount for exempted services was introduced on 01.03.2006 will also not carry their case any further inasmuch as they are covered under "Health and Fitness Centre" was never in doubt as they themselves registered under the same category and discharged the service tax liability on the amounts received by them for Gymnasium used by their members.

++ It can be seen from the (definitionof)"health club and fitness centre" that it is including a hotel or resort providing health and fitness service. Undoubtedly the appellant is a charitable institution and are establishment and they would fall under the category having all the facilities providing health and fitness Centre.

Holding that there is no merit in the appeal, the order impugned was upheld and the appeal was rejected.

(See 2015-TIOL-1937-CESTAT-MUM)