The pace at which the socio-economic conditions are changing in the world, it has taken a definite toll on the human mental and physical health. Old Indian medicinal systems like Ayurveda, Yoga, Naturopathy, etc. are picking their pace once again. The father of the nation is also known as father of naturopathy. Gandhiji not only made the naturopathy popular, but also revived the ancient knowledge of natural remedies to overcome routine diseases. Even the CBEC recognises the importance of health in one’s life and therefore have exempted the health care services, provided that health care services are in recognised systems of medicine. Though, the Statute, Rules or any Notification does not provide the information that which systems of medicine can be termed as recognised, the Education Guide released by CBEC states that Allopathy, Yoga, Naturopathy, Ayurveda, Homeopathy, Siddha, Unani are recognised systems.
If one talks about the naturopathy, it is very clear that if the medical practitioner is running the naturopathy clinic and is charging for consultation than such activity is exempted. However, as far as treatments are concerned, there are doubts as the naturopathy treatments rendered in bit different manner than other systems of medicines. Naturopathy basically deals with the lifestyle changes, most naturopathy treatments requires accommodation on the part of the patient ranging from 3 days to 3 months, depending on illness and its severity. In last few years many naturopathy clinics have opened across India. Such clinics over and above the fees for treatment, separately charges the patient and accompanying person for accommodation. The charges for accommodation are also ranging from as low as Rs.300/- per day to as high as Rs.15,000/- per day. Thus, the question may arise that whether Service Tax should be charged on such accommodation amount. One school of thought may say that it should not be under Service Tax – as the main purpose is treatment and accommodation is incidental and it should be naturally bundled with the exemption portion i.e. naturopathy services. Further, even the corporate hospitals (treating patients with allopathic treatments) also do not pay Service Tax on room rents, even in case of such hospitals the room rent per day varies as per the size and facilities of the room.
The other view is that the room rent or accommodation charges by the naturopathy clinics would be liable to be taxed as the treatment and the accommodation are two different aspects and they cannot be naturally bundled. Further, the room rent has no relation to treatment whatsoever. Thus, it should be falling out of the exemption criteria of health care services. Further, unlike surgical treatments tendered by the allopathic hospitals, the accommodation part is mostly not required under naturopathy treatments. Thus, there are two views as to whether Service Tax should be levied on accommodation/room rent received by the naturopathy clinics. Here it is pertinent to note that, even if such accommodation is termed as taxable, another exemption can be availed for those units/rooms where declared tariff of a unit of accommodation is below one thousand rupees per day.
Another gray area is that in the erstwhile positive list Service Tax regime, it was mentioned that Health club and fitness centers services such as oil massage, sauna bath, whirlpool bath, steam bath, practicing of yoga etc. will be taxable. The Departmental clarification on Service Tax being M.F.(D.R.) F.No.B11/1/2002-TRU dated 1.8.2002 excluded only therapeutic treatments from payment of service tax as they are prescribed by the medical professionals to the patients depending upon the condition of the patient for curing various diseases. The above treatment viz. oil massage, sauna bath, steam bath etc. are also advised by naturopath or ayurvedic clinics. Whether such would be taxable in light of old circular or it would be exempted in light of Mega Exemption Notification by way of Health Care Services. The Board needs come out with a clarification, as whether there is intention to give exemption or there is a policy to charge the Service Tax, the definition should be made amply clear to avoid problems at a later stage.