2018 (11) TMI 751 - AT - Service Tax

Levy of service tax - therapeutic massage - revenue sharing basis agreement - Held that - If protocols have been laid down by the Medical Consultant for the Ayurvedic massages, etc., and there is no dispute that they are being followed and further, when it has not been alleged that the masseurs are not trained professionals, surely the benefit of doubt has to be given to the respondent. There is no infirmity with the view taken by the Commissioner (Appeals) that the Department has not adduced any evidence contrary to that nor made any enquiries about the alleged massages otherwise carried out by the appellant . The decision of the Commissioner (Appeals) setting aside the demand of service tax on such impugned Health and Fitness Services is therefore held to be sustainable. Time Limitation - Held that - The appellant had registered themselves as Mandap Keeper and had been paying service tax and filing ST-3 returns since October, 2003, whereas the Show Cause Notice has been issued for the period April, 2003 to March, 2008 - appeal of Revenue dismissed. Decided against Revenue.

Issues:
1. Non-discharge of service tax liability on Health and Fitness Services and Mandap Keeper Services.
2. Demand of service tax liability, interest, and penalties.
3. Exemption under Notification No. 12/2003 for Mandap Keeper Services.
4. Time-bar for the demand of service tax.
5. Imposition of penalties.
6. Appeal against the Commissioner (Appeals) decision.

Analysis:
1. The proceedings were initiated against the respondent for not discharging service tax liability on Health and Fitness Services and Mandap Keeper Services provided from April 2003 to March 2008. The Original Authority confirmed the demand with interest and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. The Commissioner (Appeals) held that the demand for tax on Health and Fitness Services was not sustainable as therapeutic massage falls outside the scope of service tax. However, the respondent was not eligible for exemption under Notification No. 12/2003 for Mandap Keeper Services due to lack of supporting documents. The Commissioner also noted that a significant portion of the demand was time-barred, and penalties were not applicable due to no suppression of facts.

2. During the hearing, the respondent was absent, and the Revenue argued that the massages provided were not therapeutic as per the agreement terms. The Revenue contested the Commissioner's finding that a major portion of the demand was time-barred. The Tribunal considered the Revenue's arguments and reviewed the facts presented.

3. The Tribunal analyzed the CBEC Circular clarifying that therapeutic massages provided by qualified professionals under medical supervision are not taxable. Considering that protocols were followed by the respondent as per the Medical Consultant's instructions and no evidence was presented to dispute the professionalism of the masseurs, the Tribunal upheld the Commissioner's decision to set aside the demand for service tax on Health and Fitness Services. The Department's appeal on this issue was dismissed.

4. Regarding the time-bar issue, the Tribunal found that the respondent had been registered as a Mandap Keeper since October 2003, paying service tax, and filing returns. As the Show Cause Notice covered a period from April 2003 to March 2008, the Tribunal upheld the Commissioner's decision to limit the demand to one year. The Department's appeal on this matter was also dismissed.

5. Ultimately, the Tribunal dismissed the Department's appeal in its entirety, affirming the Commissioner (Appeals) decisions on the demand for service tax, time-bar limitations, and penalties. The judgment was dictated and pronounced in open court.

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