Ayurvedic treatment by a medical hospital qualifies as healthcare service, supporting exemption for clinical establishments.

Therapeutic Ayurvedic treatment provided by a duly functioning hospital under medical supervision was treated as healthcare service, not as taxable Health and Fitness Service, because the record showed diagnosis, treatment, patient case-sheets, licences, and qualified medical supervision rather than general wellness activity. On that basis, the services also fell within the exemption for health care services provided by a clinical establishment under Notification No. 25/2012-ST for the post-01.07.2012 period. The documentary evidence, rather than the absence of isolated certificates, established the hospital character of the activity, so the demands for tax, interest, and penalties could not survive.

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Issues: (i) whether the appellant's Ayurvedic treatment activities were classifiable as "Health and Fitness Services" or as "Healthcare Services"; and (ii) whether the appellant was entitled to exemption under Notification No. 25/2012-ST for the post-01.07.2012 period.

Issue (i): whether the appellant's Ayurvedic treatment activities were classifiable as "Health and Fitness Services" or as "Healthcare Services".

Analysis: The appellant produced hospital records, patient case-sheets, treatment procedures, doctor and therapist details, licences, and an affidavit of a qualified Ayurvedic physician to show that the centre functioned as a hospital providing diagnosis and treatment under the Ayurvedic system of medicine. The Revenue did not produce contrary evidence showing that the services were merely for general well-being. The record also showed that the therapies were administered under medical supervision and were therapeutic in nature. In these circumstances, the services could not be treated as mere massage or wellness services falling within the taxable category of health and fitness services.

Conclusion: The appellant's services were held to be healthcare services and not taxable "Health and Fitness Services".

Issue (ii): whether the appellant was entitled to exemption under Notification No. 25/2012-ST for the post-01.07.2012 period.

Analysis: Once the activities were found to be healthcare services rendered by an Ayurvedic hospital, they fell within the exemption for health care services by a clinical establishment. The exemption entry was applied on the basis that the institution was a recognised medical establishment providing treatment and care in a recognised system of medicine. The authorities' reliance on the absence of certain certificates was rejected because the broader documentary record already established the therapeutic and hospital character of the appellant's activities.

Conclusion: The appellant was entitled to exemption under Notification No. 25/2012-ST for the relevant period.

Final Conclusion: The demands, interest, and penalties could not survive, and the impugned orders were set aside in full, granting relief to the appellant.

Ratio Decidendi: Therapeutic Ayurvedic treatment provided by a duly functioning hospital under medical supervision is healthcare service, not general wellness service, and such services are exempt where the notification covers health care services by a clinical establishment.

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