Hyderabad: The Hyderabad High Court has held that trusts and other institutions that promote an indigenous system of medicine cannot be discriminated against and deprived of benefits under the tax exemption notification of the Centre.
A division bench comprising Justice V. Ramasubramanian and Justice J. Uma Devi was allowing a petition by the Manthena Satyanarayana Raju Charitable Trust challenging a demand of Rs 80 lakh by the Central Board of Excise and Customs as service tax.
The bench observed that the expression “clinical establishment” under the tax exemption notification of the Centre would mean a hospital, nursing home, clinic, or any other institution that offers services or facilities requiring diagnosis or treatment or care for illness.
The bench said: “A system of medicine that focuses mainly on healthy living and not merely prolonged existence cannot be denied the benefit of tax exemption on the basis of a misconception that a clinical establishment is one that would treat people after they fall ill and not one that will prevent people from falling ill.”
Alternative medicinal systems like Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy are referred to in the abbreviated form of AYUSH.
The Trust told the court that they were actually providing nature cure treatment; that their main activity was to spread awareness of health by way of naturopathy, food therapy, water therapy and yoga at their premises.
The petitioner submitted that the authorities imposed service tax considering the services offered by them fell under the category of “health and fitness services”.
The petitioner pointed out that they have registered as a public charitable Trust under Section 12AA of the Income Tax Act, 1961.
While setting aside the demand, the bench pointed out: “It is important to note that a Multi or Super Specialty Hospital, which is not registered under Section 12AA of the Act, would still fall under Serial No. 2 of the exemption notification. But unfortunately, a hospital or health care centre providing indigenous system of treatment or wellbeing may have to fall only within the purview of the Entry No. 4 of the exemption notification.”
The bench observed that if the authorities confer benefits upon the clinical establishments, they cannot be made inapplicable to a holistic healthcare institution such as the petitioner, as it would tantamount to killing our indigenous system of health and wellbeing....