Economy

Naturopathy, yoga provided by a Resort as total package will attract GST

Shishir Sinha | | Updated on: May 04, 2022

AAAR said accommodation service and other services including naturopathy rendered during the course of said service is covered under composite service

Naturopathy and yoga offered as part of a package in a resort will attract Goods and Services Tax. This is a significant ruling by the Uttarakhand’s Appellate Authority for Advance Rulings (AAAR) as naturopathy and yoga are exempted from GST, when provided independently.

The Uttarakhand AAAR has held that all services provided in relation to or in addition to accommodation services are liable to GST applicable to ‘Accommodation Service’ in as all such ancillary/additional activities have a proximal nexus with accommodation services. Accordingly, it rejected the appeal made against the ruling of the Authority for Advance Ruling (AAR). Earlier, Gujarat AAR also gave similar ruling.

The appellant Corbett Nature Reserve operates a resort, namely “Aahana-The Corbett Wilderness” and also runs an independent unit, namely “Aahana Naturopathy Centre”, wherein they provide various services in the form of nature cure (drugless cure) and Yoga therapies (healthcare services), which are not restricted only to the in-house customers, but also open to all. As nature cure and yoga do not attract GST, the appellant moved to AAAR with an appeal against the AAR, which had said that no exemption will be available to the Centre.

AAAR said that the applicant has advertised and marketed their accommodation service as their main service and naturopathy as an additional service. Thus, “the accommodation service and other services including naturopathy rendered during the course of said service is covered under composite service and the accommodation service constitutes the predominant element and therefore, becomes the “principal supply” and other services including naturopathy shall form the part of that composite supply,” it said.

Composite and Mixed supplies

Under the GST mechanism, when two or more goods/services are provided, they are called either ‘composite supply’ or ‘mixed supply’. Composite supplies are those where goods or services or both are usually provided together in the normal course of business. While goods and service are treated as principal and the other as incidental, GST rate for principal will be applicable on the entire supply. Mixed supply is applicable for bouquets of various goods or services. Highest rate among such goods or services will be the rate for the entire supply.

Commenting on the latest ruling, Harpreet Singh, Partner (Indirect taxes) at KPMG in India says: “This ruling has adopted a narrow interpretation of ‘healthcare services’ by excluding ancient yogic ways of treating illness or injury-what we call in modern times as wellness. Typically health resorts or wellness centers are perceived by general public as places for curing one’s health by incorporating methods from Ayurveda and other yogic practices.” Therefore, the applicant in this case had sought exemption under health care services. 

interestingly, in this case, the authorities have relied on the way the services were advertised and marketed, he said.

“It has been observed that therapy was offered strictly on residential basis although applicant claimed it to be open to all, thus, lot of emphasis has been given to the way services have been mentioned on the website,” he added.

Published on May 04, 2022
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