BEAUTY TREATMENT SERVICE

[Mr. M. GOVINDARAJAN]

Sec. 149 of Finance Act, 2002 provides for the levy of service tax on ten services with effect from 16.08.2002. 'Beauty treatment service' is one among them introduced with effect from 16.08.2002. 'Beauty treatment' is, as defined by Sec. 65(17) of the Finance Act, 1994, including hair cutting, hair dyeing, hair dressing, face and beauty treatment, cosmetic treatment, manicure, pedicure or counseling services on beauty, face care or make up or such other similar services. The phrase 'such other similar services' is capable of covering wide range of services. The definition is an inclusive one.

Sec. 65(105)(zq) of Finance Act, 1994 defines the taxable service in respect of 'beauty treatment service' as any service provided or to be provided to any person by a beauty parlor in relation to beauty treatment.  Effective from 01.05.2006 taxable service includes any taxable provided or to be provided by any unincorporated association or body of persons to a member thereof, for cash, deferred payment or any other valuable consideration.

Sec. 65 (18) of the Finance Act, 1994 defines 'Beauty parlor' as any establishment providing beauty treatment services.

Beauty treatment is a treatment to enhance the beauty of any part of human anatomy. The CBEC Instruction letter No. F.No. B11/1/2002-TRU, dated 01.08.2002 indicates that the beauty treatment does not include plastic surgery, cosmetics surgery done to improve the appearance, as they are not the kind of service provided by the beauty parlors. These are more appropriately classifiable as medical services.

For providing beauty services, beauty parlors use materials such as cosmetics and toilet preparations. A point has been raised as to whether the cost of such materials will be included in the value of taxable service. It is clarified by the department that these materials are essential for providing the service and they are not sold as such but used for treatment such as facials etc.,   Therefore they are integral part to the service provided. Hence service tax will be charged on the gross amount and no abatement is admissible on account of the value of material consumed in providing the service.

  The circular further states - "often beauty parlors also sell cosmetics in retail and no service tax is payable on these sales of cosmetics or any other materials."

CASE LAWS:

1. Commissioner of Central Excise, Mangalore V. Beau Monde's Clinic - 2007 (8) S.T.R. 169 (Tri. - Bang.) [Affirmed by the HC in 2009 TMI - 32918 - KARNATAKA HIGH COURT]

The Department demanded service tax on the ground that the assessee undertook hair bonding, hair weaving, sale of wigs etc., It was held that the assessee was not carrying on the activity of beauty treatment but only selling and repairing wigs and carrying on consultations.   Sale and repairs of wigs was not considered as the provision of beauty treatment service.

2. Commissioner of Central Excise, Mangalore V. Beau Monde's clinic - [2009 -TMI - 32918 - KARNATAKA HIGH COURT]

Aggrieved against the order of the tribunal before CESTAT as discussed in case law No. 1, the department filed appeal before High Court, Bangalore. The High Court held that the Commissioner (Appeals) had by an elaborate and detailed order assigned reasons as to why the activities of which were being carried on by the assessee would not fall under the heading 'Beauty treatment'. The same has been confirmed by the Appellate Authority.

The High Court is of the opinion that there is no merit or substance in the appeal filed by the department and dismissed the appeal.

3. Commissioner of Central Excise & Customs, Vadodara-I V. New look Cosmetic Laser Center - [2009 -TMI - 32875 - CESTAT, AHMEDABAD]

The dispute in the appeal is as to whether the activity of various kinds of laser treatment for curing physical disorders/deformities and used for removal of facial and body hairs can be held to be beauty treatment service so as to be leviable to service tax under Sec. 65(17) of the Finance Act, 1994.

The Original Adjudicating Authority confirmed the demand against the appellant by holding that the treatment given by the appellant cannot be held to be surgery, whether cosmetic or plastic and the same is for enhancing the beauty and looks of person receiving the treatment. As such he has held that the services are covered under the category of beauty parlor services.

In the appeal before the Commissioner (Appeals) the assessee put the following submissions:

§ Theirs is a clinic providing cosmetic surgical treatment for skin disorder;

§ The doctor examines the patient and the records of the skin disorder;

§ Depending upon the disorder, the doctor advises to undertake test patch to ensure that the surgical treatment will not be harmful to the body of the patient and to see whether any side effect is/will be generated because of laser treatment;

§ Full details of patient, like name, age, address, type of skin disorder, date of first visit and subsequent visits are recorded in the patient register being maintained at the clinic;

§ Only the specialist doctor can judge, based on the type of the skin what laser energy has to be applied;

§ Looking at the results of the test patch, the doctor advises patient to take medical treatment through laser on a scheduled date.  The treatment is given under the supervision and guidance of the doctor. Depending upon the hair growth and the type of the skin, the doctor applies the laser energy beam on the patient;

§ The patient is given second sitting time and date for re-treatment of the areas first treated. Approximately 4 to 6 (or sometimes more) surgical treatments are performed to reduce substantially the hair growth of the patient.  The effect of the laser treatment on each session is recorded systematically in the patient register.

§ The Board Circular has clarified that 'Beauty treatment' does not include plastic/cosmetic surgery done to improve appearance, as they are not the kind of service provided by the beauty parlors.  These are more appropriately classifiable as medical services.

The Commissioner (Appeals) is of the view that the laser surgery is more akin to medical services.  It is also not disputed that laser surgery is performed by qualified doctors. Further, it is also possible that while curing a disease with laser, the appearance may also improve. However, even if the laser treatment improves the appearance, the same does not attract levy of service tax. It has been amply clarified by the Board that services related to cosmetic surgery are not covered by the provision of Sec. 65 (17) of the Finance Act, 1994.

The said order is impugned before the tribunal by the Revenue on the ground that-

As per the definition of the treatment cosmetic laser in Random House Unabridged Dictionary - II Edition, the same is reproduces as "plastic surgery for improving a person's appearance, by restoration of damaged areas of skin, removal of wrinkles or blemishes etc.," and the term plastic surgery has been defined in the Merriam Webster's Collegiate Dictionary - Delux Edition to be -"the branch  of surgery dealing with the repair or replacement of malformed, injured or lost organs or tissues of the body, chiefly by transplant of living tissues"  As such that activity laser hair treatment will not fall under cosmetic surgery but should be treated as an activity of beauty treatment and as such covered under the category of beauty parlor services;

* The assessee subsequently have taken registration as beauty parlor under service tax from July 2004 and are paying service tax, which strengthen Revenue's case that theirs is beauty parlor;

* The advertisements are having the effect neither a hospital and customers do not expect to see a doctor at the center.

The assessee clarified that they were registered as beauty parlor since they provided the services of facial, pedicure and manicure.  The assessee cited a case law - New Look Cosmetic, Laser Center V. Commissioner of Central Excise, Mumbai - 2006 (200) ELT 336 (Tri. Mum) in which it was held that the surgical laser imported was a medical equipment entitled to benefit of notification and it was observed that surgical laser is designed to provide a most effective, reliable use and is well accepted as surgical procedures in cosmetic surgery.

The tribunal found that the appellant authority had given a detailed and reasoned findings, which cannot be faulted upon.   Taking note of Board Circular which clarify that - "beauty treatment services covers the beauty treatment such as facial, manicure, pedicure and other make-ups provided by beauty parlor"  However it does not include hair cutting and shaving and further it does not include physical surgery/cosmetic surgery done to improve appearance". It is to be held that the laser treatment given by the respondent is near to the cosmetic surgery treatment.   Further, in view of this factual position that such treatment has to be given either by doctors or under their supervision and guidance, which does not stand reverted by the Revenue, it has to be held that the same is a cosmetic surgical services.