2013 (8) TMI 804 - AT - Service Tax

Taxability of residential as well as non-residential yoga courses - Health Club and Fitness Service u/s 65 (105) (zw) r.w. section 65(51) and (52) - yoga camps stay - Held that - the various yoga courses, residential as well as non-residential, being organized by the appellant are for general physical well-being and there is nothing on record to prove, that these courses are meant for specific element. - appellant s plea that their services are not covered by the definition of health and fitness service not accepted. - Prima facie case is against the assessee. Extended period of limitation - Held that - since March 2004 there was correspondence between DYM trust. While the department was of the view that the activity of the trust were taxable as health and fitness service, the stand of DYM trust was that the same is not taxable, but ultimately sometime in March 2005, the required information was furnished to the department by DYM trust. However surprising, no further action was taken by the department and as such no show cause notice was issued. It is only in 2011 that fresh inquiry was initiated against Patanjali Yogpeeth Trust, without any reference to the earlier correspondence of the sister trust with the department. - prima facie neither longer limitation period of five years can be invoked nor penalty under Section 78 of the Finance Act would be excisable. While the department has a case on merit, the bulk of the demand would be time barred as only normal limitation period would be available. - Pre deposit ordered to be made for Rs. 40 Lacs - stay granted partly.

Summary

Issues Involved:
1. Taxability of services provided by Patanjali Yogpeeth Trust (PYT) under Section 65 (105) (zw) of the Finance Act, 1994.
2. Applicability of the extended limitation period under proviso to Section 73 (1) of the Finance Act, 1994.
3. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Taxability of Services Provided by PYT:
The primary issue is whether the yoga courses organized by PYT are taxable under the definition of "health and fitness service" as per Section 65 (105) (zw) read with Section 65 (51) and (52) of the Finance Act, 1994. The appellant argued that their services are not taxable because the term "yoga" in the definition should be interpreted using the principle of noscitur a sociis, implying it covers only general physical well-being and not specific ailment cures. However, the Tribunal noted that the definition of "health and fitness service" explicitly includes yoga as a service for physical well-being. Therefore, the Tribunal held that the yoga courses, both residential and non-residential, organized by the appellant are for general physical well-being and are covered under the taxable services defined in the Act.

2. Applicability of Extended Limitation Period:
The Tribunal examined whether the extended limitation period of five years under proviso to Section 73 (1) could be invoked. The appellant claimed a bona fide belief that their services were not taxable, supported by prior correspondence between Divya Yog Mandir Trust (DYM) and the Central Excise Department in 2004-2005. The Tribunal acknowledged that both PYT and DYM are headed by the same person and noted the extensive correspondence between DYM and the department, which did not result in any show cause notice. Given this context, the Tribunal found merit in the appellant's argument that they could not be accused of suppressing facts, and thus, the extended limitation period was not applicable.

3. Imposition of Penalties:
The Tribunal addressed the imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Commissioner had imposed penalties, asserting deliberate suppression of facts by the appellant. However, the Tribunal found that the Commissioner did not consider the prior correspondence of DYM with the department. Since the same person headed both trusts and similar activities were conducted, the Tribunal concluded that the appellant's actions did not constitute suppression of facts. Consequently, the Tribunal held that penalties under Section 78 were not justified.

Conclusion:
The Tribunal concluded that while the services provided by PYT are taxable under the Finance Act, 1994, the bulk of the demand is time-barred due to the non-applicability of the extended limitation period. The Tribunal directed the appellant to deposit Rs. 40,00,000/- within eight weeks, with the balance amount of service tax demand, interest, and penalties stayed until the disposal of the appeal.