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Health and Fitness Services [Sec 65(105)(zw)]
Effective upto 30th June, 2012
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INTRODUCED: With Effect From 16th August 2002
 
Contents
Scope
Exemption
Relevant Notifications / Circulars
Accounting Code
Service Tax 00440205
Interest  00440206
Penalty 00441358
 
DEFINITION:

According to Section 65 (105) (zw), any service provided or to be provided to any person, by a health club and fitness centre in relation to health and fitness services, is a ‘taxable service’.

According to Section 65 (51), ‘health and fitness service’ means service for physical well being such as, sauna and steam bath, Turkish bath, solarium, spas, reducing or slimming saloons, gymnasium, yoga, meditation, massage (excluding therapeutic massage) or any other like service.

According to Section 65 (52), ‘health club and fitness centre’ means any establishment, including a hotel or resort, providing health and fitness service.

 
SCOPE:
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Health and fitness services are provided by clubs, fitness centers, health saloons, hotels, gymnasium and massage centers. The services which fall under this category might be for weight reduction and slimming, physical fitness exercise, gyms, aerobics, yoga, meditation, reiki, sauna and steam bath, turkish bath, sun bath and massage for general well being.

Therapeutic massage does not come in the ambit of taxable service. Therapeutic massage basically means a massage provided by qualified professionals under medical supervision for curing diseases such as arthritis, chronic low back pain and sciatica etc.

Ayurvedic massages, acupressure therapy, etc. given by qualified professionals under medical supervision for curing diseases / disorders will come under the category of therapeutic massages. If the massage is performed without any medical supervision or advice but for the general physical well being of a person, such massages do not come under the purview of therapeutic massages and they would be liable to Service Tax.

In case where clubs and fitness centers charge a monthly / periodic amount as membership fee and only members are allowed to avail their services. It is clarified that membership fee charged by the club is in lieu of service provided and therefore in such cases Service Tax would be leviable on periodic / monthly membership fee.

Certain recognized institutes impart diploma courses in yoga. Such institutes and research center do not fall in the category of health club and fitness center and accordingly would not be liable to Service Tax.

 
SERVICE TAX EXEMPTIONS:
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(a)  Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/-  (Service Tax Notification No. 08/2008-S.T., dated 01.03.2008)

(b)  Services provided to the United Nations or International Organisations

(c)  Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers

(d)  Services which are exported as per ‘Export of Services’ Rules

(e)  Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.

(f)  Services provided by Reserve Bank of India

(g)  Out of total value of service provided proportionate value of goods and material provided by the Service Provider

 
RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES:
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Service Tax CBEC Instruction Letter (File No. B11/1/2002-TRU), dated 01-08-2002.
 
 
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Case Laws Related

  • STO 2009 CESTAT 1232
  • Service Tax: Health club and Fitness centre: Quantification of demand: The show cause notice specifically says that the service tax liability has been worked out based upon the best-judgment method as there were no evidence coming forth from the appellant regarding the amount collected by the appellant towards services rendered and in view of the decision of the Tribunal in the case of Vijaya Steel Ltd. [STO 2006 CESTAT 1302]. On the date of issuance of show cause notice, the provisions of Section 72 were in force. Adjudicating authority in his OIO has clearly brought out the lacunae and the rnis-match of the amounts collected by the appellant and the bill books shown by them as regards the service charges collected. These particular findings of the adjudicating authority has not been contested by the appellant before the first appellate authority.(Para 6). Since the issue needs re-quantification, the impugned orders is set aside and the matter remanded back to the adjudicating authority(Para 11).

    Matter remanded. 

  • STO 2008 CESTAT 391
  • Service Tax: Penalty: This is not a case where the respondents were just not aware because of newly introduction of Service tax. On the other hand the respondents were not only aware but were also recovering service tax from their customers and not paying to department. They were actually pocketing the same and it was on detection by the department that the amount of tax and interest was paid. In such a case the plea of ignorance cannot be accepted as they could have enquired the same from the department and paid the service tax. (Para 5).

    Revenue appeal allowed.
     

     
     

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