Supreme Court Directs Patanjali Trust: Pay Rs 4.5 Cr Tax for Yoga Camp Entry Fees
The Patanjali Yogpeeth Trust, associated with Baba Ramdev, has faced a setback in the Supreme Court. The court upheld the decision of the Appellate Tribunal, which mandated the trust to pay service tax on entry fees collected for organizing yoga camps. Justices Abhay S. Oka and Ujjal Bhuyan of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) Allahabad bench rejected the appeal on October 5, 2023, affirming the liability of the trust to pay service tax.
This ruling signifies a significant legal development in the ongoing debate surrounding the taxation of spiritual and wellness services, impacting institutions deeply rooted in traditional practices like yoga.
CESTAT Upholds Decision: Yoga Camp Fees Subject to Service Tax
In a significant development, the Customs Excise & Service Tax Appellate Tribunal (CESTAT) has affirmed its stance regarding the appeal from Patanjali Yogpeeth Trust. The tribunal stated that the fees collected for participating in yoga camps, organized by the trust, constitute a service as participants engage in yoga sessions.
Therefore, these activities fall within the category of health and fitness services and are liable for service tax. The tribunal found no grounds to intervene in the earlier decision, emphasizing that the trust is accountable for service tax on both residential and non-residential yoga camps. This ruling reinforces the taxation framework applicable to activities blending spirituality and wellness, impacting institutions such as yoga trusts.
Tribunal’s Ruling on Yoga Camp Fees
The tribunal issued a ruling regarding the activities of yoga guru Ramdev and his associate Acharya Balkrishna-led trust, emphasizing their engagement in various camps providing yoga instruction.
According to the tribunal’s orders, the fees collected from participants of these yoga camps were considered as donations. It was stated that these donations were solicited solely for the purpose of facilitating the aforementioned services. Therefore, the interpretation of these fees falls under the category of donations, as elucidated by the tribunal.
Understanding the Tax Liability
The Customs and Central Excise Commissionerate of the Meerut range had demanded approximately Rs. 4.5 crore in service tax, along with penalties and interest, for the period from October 2006 to March 2011.
In response, the Patanjali Yogpeeth Trust argued that the services it provides are solely for the management of illnesses. However, it was concluded that these services do not qualify for exemption under the category of “Health and Fitness Services.” Consequently, Patanjali will be required to pay the sum of Rs. 4.5 crore.
