Osho International Foundation vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. I

APPEAL No.ST/92 & 93/10

(Arising out of Order-in-Original No.VGN (30)7/STC-Adj./Commr/Osho/09-10/853 dated 30/11/2009 passed by Commissioner of Central Excise, Pune-III)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Osho International Foundation Neo Sannyas Foundation Appellant

Vs. Commissioner of Central Excise, Respondent Pune

Appearance:

Shri.J.F.Pochkhanwala, Sr. Advocate for appellant Shri.S.V.Nair, Asst. Comm. (AR), for respondent

CORAM:

Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

Date of Hearing : 28/04/2015 Date of Decision : /05/2015

ORDER NO

Per: M.V. Ravindran

1. These 2 appeals are directed against Order-in-Original No.VGN (30)7/STC-Adj./Commr/Osho/09-10/853 dated 30/11/2009 passed by Commissioner of Central Excise, Pune-III. Since both the appeals are raising the same question of law and facts, they are being disposed of by a common order.

2. The revenue authorities started an investigation against the appellant as to that they providing services of yoga, meditation and massage to the customers/participants on payment of specified charges/fees. Subsequent to detailed enquiries undertaken and after obtaining the relevant documents, lower authorities came to a conclusion that the services rendered by the appellant would fall under the category of health and fitness services which introduced in 2002. After completion of the enquiry and the statements recorded, a show cause notice was issued directing the appellants to show cause as to why the demand of service tax liability be not raised on them for the period 1/04/2008 to 70/03/2009 as detailed in annexure to the show cause notice, interest thereof and various penalties, be not imposed on them. Both the appellants contested the show cause notice on merits as well as on limitation claiming that the meditation courses conducted by them is spiritual meditation and is not what is stipulated as services under the category of health and fitness Centre as the meditation courses conducted by the appellant does not help in physical well-being and revenue authorities were aware of the activities. The adjudicating authority after following the due process of law did not agree with the appellants contention. She confirmed the demands along with interest and imposed penalties by the impugned order.

3. Learned Senior Counsel after taking us to the impugned order and the show cause notice would submit that the adjudicating authority has erred in passing the impugned order. He would draw our attention to the definition of the health and fitness Centre and submit that to fall under the said definition the activity as described in the definition has to show that it was undertaken for physical well-being. He would submit that the meditation courses conducted by the appellant are spiritual meditation and has nothing to do with the physical well-being of an individual undergoing the meditation course. He would also submit that the reading of the definition indicates all other activities like sauna steam bath, Turkish bath, solarium, spas, reducing or slimming salons, gymnasium, yoga are pertaining to the physical well-being of individual and the word meditation in the definition is a misfit. He would emphasize that meditation is not connected with any physical well-being hence applying the law of ejestem generiss the demand confirmed is not correct and needs to be set aside. He would then take us through the statement recorded by the authorities of one of the personnel of the appellants and submit that the said person has categorically stated as to the fact that the meditation courses of the appellants is for spiritual purposes.

He would also draw attention to the negative list of services as introduced after July 2012 and submit that any activity related to spirituality has been exempted from the service tax. He would then draw our attention to a letter dated 25 April 2003, vide which the office of the Chief Commissioner of Central Excise and Customs Pune Zone has clarified to appellants no service tax registration is required for the meditation and yoga. He would submit that subsequently on 18th February 2009, the Central board of Excise and Customs on an query raised by Commissioner of Central Excise, Pune-III informed that the services rendered by the appellant would be falling under the category of health and fitness Centre. He would submit that when there is a change of mind of the revenue authorities, such a change would be applicable from the date when the revenue authorities informed the appellant. He would rely upon the judgement of the High Court of Bombay in the case of Bhagwati nylons Limited  1980 (6) ELT249 for the proposition that the revenue authorities must show that the item in question is taxable in the manner claimed by them and the burden to the same is on the taxing authorities.

He would rely upon the decision of the High Court of Punjab and Haryana in the case of Dalmia biscuits Limited  (1992) 194 ITR 749 for the proposition that every word of the statute has to be assumed to have been deliberately and consciously incorporated therein by the legislature and has thus to be given a meaning and effect. He would also rely upon the following case laws.

3.1 Learned Senior Counsel would also rely on the CBEC Circular No.96/7/2007-TRU dated 23/8/2007 submit that the said Master circular does not give any clarification on the service tax liability on the meditation services rendered for spiritual purposes.

4. Learned departmental representative on the other hand would draw our attention to the findings recorded by the adjudicating authority. He would submit that the definition of health and fitness Centre is very clear and unambiguous inasmuch as the word meditation is included specifically and there is no scope to exclude the activities undertaken by the appellant from the definition. He would submit that there is no dispute as to the fact that the appellant are collecting fees when individuals enrolls for meditation course. He would also draw our attention to the fact that appellants own website indicates physical benefits by undertaking the meditation courses offered by them. He would also submit that on similar issue, this bench in the case of Manav Sansadhan Vikas Ani Sanshodhan Manch Kabir Baug Matha Sanstha Vs. CCE, PuneIII  2014  TIOL  1192 CESTAT-MUM has been held that yoga will under the category of the services health and fitness services.

5. Learned Senior Advocate in rejoinder would submit that the website referred to in the impugned order for holding against the appellant is not the official website of the appellants that the website is of some other person and no reliance can be placed on such website information. It is also his further submission that physical well-being due to meditation, is an incidental benefit that arises hence the primary objective of the meditation being of spiritual in nature cannot be overlooked.

6. We have considered the submissions made at length by both sides and perused the records. It is a case of the revenue that appellants herein fall under the definition of health and fitness services by offering meditation courses for a consideration, while it is a case of the appellant that the meditation courses conducted by them is of spiritual nature and not liable for service tax.

7. In order to appreciate the rival contentions it is required to reproduce the definition as defined in section 65 (51) of the finance act 1994 which is as under.

health and fitness service means service for physical well-being such as sauna and steam bath, Turkish bath, solarium, spas, reducing or slimming salons, gymnasium, yogs, medication, massage (excluding therapeutic massage) or any other like service.

8. It is undisputed that appellants are holding meditation courses for individuals on receipt of an amount as a consideration. The definition of health and fitness services clearly includes the word meditation in the ambit for charging service tax. It was argued on behalf of appellants that the courses conducted by the appellant in medication does not help an individual for physical well-being and physical well-being is the prime requirement for falling under the category of the services of health and fitness Centre. The arguments put forth by the appellants are unacceptable to us for more than one reason. Firstly, the argument as to meditation does not induce any physical well-being is erroneous, inasmuch as that by undergoing meditation course, an individual will definitely be physically well as he is at peace with his inner soul, the fact that cannot be disputed by any one. If that be so, the argument of the appellants that spiritual meditation as conducted by the appellant does not help physical well-being is to be discarded. Secondly, the meditation courses offered by the appellant may be for spiritual balance, in life but fundamentally contributes towards the physical well-being and the physical benefits of an individual. In our considered view, there cannot be a dispute that meditation helps an individual attaining mental peace. In our view, physical well-being of an individual would also encompass the mental peace of that individual, would mean that the claim of the appellant that physical well-being is incidental would not carry the case any further.

9. Now we address the arguments raised by both sides on limitation. We find that the Government of India, Ministry of finance, Department of Revenue vide their letter dated 27th February 2003, responding to a query raised by the Chief Commissioner of Central Excise, Pune, informed as under:

F.No.237/1/2003-CX.4 Government of India Ministry of Finance & Company Affairs Department of Revenue

New Delhi, the 27th February 2003

To:

The Chief Commissioner of Central Excise, Pune

Subject: Applicability of service tax on the activities of meditation run by the Osho International Foundation  Regarding 

Sir,

I am directed to refer to your letter No.IV/16/37/CCOP/SI/2001/347 dated 28/01/2003 on the above subject and to say that the decision taken for taking registration for service tax only for aerobics, swimming pool, gym, sauna, steam bath, Turkish bath etc. and not for medication and yoga appears to be in right direction.

Yours faithfully, Sd/-

(Manish Mohan) Under Secretary to the Government of India

10. On being informed by the office of the Chief Commissioner of Central Excise by letter dated March 2003 of the Boards view, the appellant were under the impression that the activity of meditation courses would not fall under the category of health and fitness services. We reproduce the said letter dated April 2003.

OFFICE OF THE CHIEF COMMISSIONER CENTRAL EXCISE & CUSTOMS PUNE ZONE ICE HOUSE, E-WING, 41-A, SASSOON ROAD, PUNE  01

F.No.IV/16-37/CCOP/SI/2001/PI Pune, the 25th April, 2003

To:

OSHO International Foundation 17, Koregaon Park Pune-411 001

Sir,

Sub: Applicability of Service Tax on the activities of meditation run by the Osho International Foundation  reg.,

Please refer to your letters dated 09/10/2002 and 14/10/2002 on the above subject.

In this regard, clarification was sought from the Board (Ministry of Finance and Company Affairs, Department of Revenue) and from the said clarification, it appears that Service Tax registration is required to be obtained for activities such as aerobics, swimming pool, gym, sauna, steam bath, Turkish bath, etc. only and not for meditation and yoga.

Yours faithfully,

Sd/ (S.D. Pradhan) Deputy Commissioner Chief Commissioners office Central Excise & Customs Pune Zone Copy to:

The Commissioner, Central Excise Pune-III  for information and necessary action with reference to Board letter F.No.237/1/2003-CX-4 dated 27/02/2003.

12. The appellants were subsequently informed by the office of the Commissioner of Central Excise-service tax cell, Pune-III Commissionerate wide letter dated 18 to March 2009 as under.

OFFICE OF THE CHIEF COMMISSIONER CENTRAL EXCISE, SERVICE TAX CELL, PUNE-III COMMISSIONERATE ICE HOUSE, E-WING, 41-A, SASSOON ROAD, PUNE  01

F.No.VGN (30)STC/PIII/SIVII-177/Osho/2008

Pune, the 18th March, 2009

To:

OSHO International Foundation 17, Koregaon Park Pune-411 001

Gentlemen, Sub: Enquiry cum verification under Service Tax  Reg.

In continuation to this office letter dated 17/12/2008 and 13/02/2009, it is to inform you that the Ministry of Finance, Department of Revenue (Tax Research Unit), New Delhi vide letter F.No.345/I/2009-TRU dated 18/02/2009 (copy enclosed) has clarified as under:

Activities, namely, yoga and meditation are specifically included in the definition of taxable service namely, Health and fitness service [Section 65 (105) (zw) read with section 65 (51) of the Finance Act, 1994]. The taxability of the activities falling under the definition is independent of the status of the service provider. Even a charitable institution providing these taxable services is liable to service tax. The letter F.No.237/I/2003-CX.4 dated 27/02/2003 is in contradiction of this definition. It has no application after the issuance of Circular No.96/7/2007-ST dated 23/082007.

In view of the above clarification of the Ministry of Finance, Department of Revenue (Tax Research Unit), New Delhi, you are liable to pay the service tax on the above said services provided by you.

Therefore, you are requested to workout the service tax liability on yoga and meditation services and to pay the same along with interest at the earliest.

Yours faithfully, Sd/-

(T.S.Krishna Murthy) Superintendent (SIV-II) Service Tax, Pune III Commte.

12. It can be seen from the above reproduced correspondences that the appellant was first informed as to there being no tax liability on the meditation courses conducted by them, subsequently there was a change in view of the Board and it was opined that service tax liability arises on the meditation courses. In our considered view, revenue authorities cannot demand service tax liability from the appellants for the period prior to 18 March 2009. The arguments put forth by the learned departmental representative that revenue can invoke a period of one year from the date of show cause notice is also incorrect argument in the facts of this case. A change in view by the highest body of the indirect taxes can be applied only from the date when the change of view took place.

13. We find that this is the view taken by the Tribunal in the case of Deposit Insurance & Credit Guarantee Corporation Vs. CCE & ST, Mumbai - 2015-TIOL-629-CESTAT-MUM (wherein one of us was a member). It is also a settled law that when there is a change of the view of the revenue, it can be made applicable only from the date when the change of view took place and informed to the assessee. In view of the foregoing, we find that the appellants have made out a case for setting aside the demand of the service tax liability, interest thereof, and the penalties for the period 01/04/2008 to 17/3/2009.

14. As we have disposed of the appeals on merits, we are not recording any findings on various other submissions made by both sides.

15. In view of the foregoing, we set aside confirmed demand, interest thereof and penalties imposed.

(Pronounced in Court on )

(P.S. Pruthi) Member (Technical) (M.V. Ravindran) Member (Judicial)

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