No Service Tax on Health & Fitness Services and Beauty Parlour Services as per Revised Rate of 12.24% Prior to 18.04.2006: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax can be levied on Health and Fitness Services and Beauty Parlour Services as per revised rate of 12.24% prior to 18.04.2006.

The appellant, M/s VLCC Health Care Ltd, is engaged in providing “Health & Fitness Services” and “Beauty Parlour Services” and are registered with Service Tax Department Commissionerate. It was noticed that the appellant was offering various slimming and beauty packages to their clients and such packages are priced on the basis of sessions / sittings required by the respective clients.

The entire costs of these packages are collected in advance from their clients for the services that have to be provided subsequently. The service tax rates were revised from 8% and further revised to 12.24%. The appellant discharged service tax at 8% for the disputed period.

The allegation of the department is that the appellant ought to have paid service tax at the enhanced rate on the portion of services that were provided or to be provided after which the rates were revised. Show cause notices were issued for different periods proposing to demand service tax along with interest and for imposing penalties. After due process of law, the original authority confirmed the demand along with interest and imposed penalty.

The issue is whether the appellant is liable to pay service tax at the revised rate of 12.24% for the period prior to 18.04.2006.

R. Charulatha appeared and argued for the appellant. It was submitted that rate of service tax levied for the said services were revised from 8% to 10.2% w.e.f 10.09.2004 and from 10.2% to 12.24% w.e.f 18.04.2006. The Central Board of Excise and Customs (CBEC) vide Circular No.65/14/2003-ST dated 05.11.2003 prescribed the procedure that has to be adopted in case of payment that was received in advance.

The Counsel clarified that the appellant is liable to pay the increased rate only at 12.24% only from 18.04.2006. The period of dispute in the present case is from 10.09.2004 to 15.06.2005. The demand raised alleging that the appellant is liable to pay service tax at the enhanced rate w.e.f. 10.09.2004 cannot sustain.

A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi, Judicial Member and M Ajit Kumar, Technical Member observed that “After considering the facts and evidence, we are of the considered opinion that the demand cannot sustain and requires to be set aside which we hereby do.”

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates