Supreme Court Rules Patanjali Yogpeeth Trust Must Pay Service Tax on Yoga Camp Donations

The Supreme Court of India has upheld a ruling by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) that the Patanjali Yogpeeth Trust is liable to pay service tax for charging an entry fee to organize yoga camps, both residential and non-residential. The CESTAT had earlier held that the yoga camps organized by the Trust, which charges fees for participation, come under the category of 'health and fitness service' and attract service tax.

The Commissioner of Customs and Central Excise, Meerut Range, had demanded a service tax of about Rs 4.5 crore, including penalty and interest, from the Trust for the period from October 2006 to March 2011. The Trust, which operates under the guidance of yoga guru Ramdev and his aide Acharya Balkrishna, had argued that it was providing services for the treatment of diseases, which are not taxable under 'Health and Fitness Services'. However, the CESTAT rejected this claim, stating that the instructions on yoga and meditation were provided to the entire gathering and not prescribed for individual treatment.

The tribunal noted that the fees collected from participants, though termed as 'donations', were actually fees for providing the services and hence covered under the definition of 'consideration'. "The tribunal had rightly held that yoga provided for a fee is a service and the court sees no reason to interfere with the tribunal's decision," the Supreme Court stated in its ruling, dismissing the Trust's appeal.

Why this matters: The Supreme Court's decision sets a precedent for the taxation of services provided by religious and charitable trusts in India. It clarifies that fees charged for activities like yoga camps, even if termed as donations, are subject to service tax if they fall under taxable service categories. The ruling could have implications for other organizations providing similar services.

The Supreme Court's ruling affirms the CESTAT's decision that the Patanjali Yogpeeth Trust's activities of organizing yoga camps and receiving donations for the same constitute a 'service' and are therefore subject to service tax. The court upheld the tribunal's stance that the trust's activities were commercial in nature and did not qualify for exemption. The decision requires the trust to pay the applicable service tax of approximately Rs 4.5 crore, as demanded by the Commissioner of Customs and Central Excise for the period from October 2006 to March 2011.

Key Takeaways

• SC upholds CESTAT order: Patanjali Trust liable to pay service tax on yoga camps.
• CESTAT ruled yoga camps are 'health and fitness service', not exempt from tax.
• Trust argued camps were for disease treatment, but CESTAT rejected this claim.
• SC affirmed CESTAT's decision that trust's activities were commercial, not exempt.
• Trust ordered to pay ~Rs 4.5 crore in service tax, penalty, and interest.