2014 (12) TMI 373 - AT - Service Tax

Health Club & Fitness Centre - Assessee a hospital or not - Held that - Commissioner (Appeals) has taken a stand that the appellant has to show proof that the service provided by them was therapeutic treatment and the department presumed that such service was not provided as part of treatment and hence confirmed the demand. It may not be a right approach. This is not a case where the assessee is claiming the benefit of exemption notification. This is a case where the Revenue has considered that the service provided by the appellant is taxable service. Therefore, obligation to show that the service provided by the appellant is a taxable service is on the Revenue and this basic obligation has not been fulfilled in this case. The demands have been confirmed on the ground that in three sample cases, the treatment has been taken by the clients for few hours The department had enough opportunity and enough powers to gather necessary evidence to show that the claim of the appellant that the service provided by them is part of treatment was wrong. No such action has been taken by the department. Taking note of the learned counsel s vehement assertion that in case the Revenue is able to show even in one case that the treatment was provided to tourists as part of the tourism, the appellant is ready to pay the entire service tax, we find that the appellant has made out a case for waiver. Accordingly, the requirement of pre-deposit of the dues adjudged is waived and stay against recovery is granted during pendency of the appeals - Stay granted.

Summary

Issues:
- Condonation of delay in filing appeal
- Challenge to demand of service tax and penalties
- Interpretation of services provided by appellant as a Health Club & Fitness Centre
- Burden of proof on Revenue for taxable service
- Prima facie case for waiver of pre-deposit

Condonation of Delay:
The appellant sought condonation of a 38-day delay in filing the appeal due to mistakenly filing only one appeal instead of two against a common impugned Order-in-Appeal. The reason for the delay was satisfactorily explained, leading to the condonation of the delay by the tribunal.

Challenge to Demand of Service Tax and Penalties:
The appeals involved challenging a service tax demand exceeding Rs. 66,44,105 for specific periods, along with penalties imposed under various sections of the Finance Act, 1994. The appellant contested the demand, arguing that the services provided were part of treatment in their registered Ayurvedic Hospital, thus not falling under the category of a Health & Fitness Centre.

Interpretation of Services Provided:
The tribunal analyzed whether the services offered by the appellant, although resembling those of a Health & Fitness Centre, could be considered as therapeutic treatment provided by a hospital. The Commissioner (Appeals) acknowledged the appellant as a registered ayurvedic hospital but raised concerns about the nature of services provided, emphasizing the need for proof that the services were therapeutic in nature.

Burden of Proof on Revenue:
The tribunal criticized the Revenue for confirming demands without fulfilling the obligation to demonstrate that the services provided were taxable. It highlighted that the onus to establish the services as taxable fell on the Revenue, which had not been met in this case. The department's failure to gather evidence to refute the appellant's claim was noted as a significant lapse.

Prima Facie Case for Waiver:
Considering the appellant's assertion that they were willing to pay the service tax if the Revenue could prove even one instance of services provided to tourists as part of tourism, the tribunal found a prima facie case for waiver. Consequently, the pre-deposit requirement was waived, and a stay against recovery was granted pending the appeals.

This detailed analysis of the judgment highlights the key issues addressed by the tribunal, including the delay condonation, challenge to service tax demands, interpretation of services provided, burden of proof on the Revenue, and the establishment of a prima facie case for waiver of pre-deposit.