MUMBAI: At the crack of dawn, you will invariably find guests at any naturopathy resort performing pranayama (deep-breathing) on its lush lawns. Typically, additional yoga exercises, ayurvedic treatments, massages, acupuncture, et all, as prescribed by the resort’s doctors for each individual, would fill up the day’s schedule. However, for the purposes of goods and services tax (GST), this regimented vacation is usually treated on the same level as that of a hotel stay and about an 18% levy (it would depend on the room tariff) would be payable by most on their final bills.
Recently, the Gujarat bench of the GST Authority for Advance Rulings (AAR) denied Nimba Nature Cure Village (a unit of Oswal Industries) a tax exemption as its services did not fall in the category of ‘health care services by a clinical establishment’.
A few divergent rulings on whether a naturopathy resort is eligible for GST exemption is available. “Conflicting rulings lead to confusion and go against the objective of providing certainty. While the views of one advance ruling authority are not binding on another, judicial discipline would suggest at least detailed reasoning should be provided for that,” says Sunil Gabhawalla, chartered accountant and GST specialist.
Nimba Nature Cure Village, stated to be one of India’s largest naturopathy centres, had approached the AAR, saying it offered wellness facilities like naturopathy, yoga, ayurveda, meditation, physiotherapy to treat diseases ranging from lifestyle disorders to respiratory problems. Professional naturopathy doctors, researchers and support staff carried out diagnosis and treatment through recognised systems of medicine. Thus it qualified as a clinical establishment and should be eligible for exemption under ‘health care services’ as per Entry 74 of Notification 12/2017, it contended.
The AAR noted that the services provided were a composite service – comprising accommodation, food and therapy. There was no option for the guests to avail of the therapy without opting for accommodation. Thus, the ‘accommodation service’ was the principal supply and the GST rates relating to it would apply.
Incidentally, in January 2019, the Goa bench of the GST-AAR, in the case of Devaaya Ayurveda & Nature Cure Centre, held it to be a clinical establishment offering health care services that was entitled to GST exemption.
A government official did not get into the nitty-gritty of the recent ruling, but said applicants are free to appeal. “Each state also has an appellate AAR. In certain cases of conflicting rulings, the Central Board of Indirect Taxes and Customs steps in with a clarification,” he explained.