2018 (6) TMI 1256 - AT - Service Tax

Tribunal exempts healthcare services from Business Support Service tax liability, emphasizing professional nature of doctors' services.

The Tribunal ruled in favor of M/s Apollo Hospitals, Bilaspur, setting aside tax liability under Business Support Service for healthcare services provided ... Business Support Service - sharing of infrastructure with doctors - portion of the fee collected by the appellant and retained by them - Held that:- The issue herein have been decided in favor of the appellant for the previous period in the case of M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL & MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE&ST INDORE, CCE&ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that There is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure - appeal allowed - decided in favor of appellant. Issues:Tax liability under Business Support Service for medical services provided by hospitals through contractual doctors.Issue 1: Tax liability under Business Support ServiceThe case involved M/s Apollo Hospitals, Bilaspur, providing healthcare services through doctors engaged on a contractual basis. The Revenue contended that the portion of fees collected by the hospitals and retained was akin to collection charges/facilitation fee, thus liable for service tax under Business Support Service for the period July 2012 to July 2013. A Show Cause Notice was issued demanding service tax of Rs. 51,03,718/- along with interest and penalties under Sections 77 and 78 of the Act.Analysis: The Revenue argued that the hospitals provided infrastructural support services to doctors, justifying the tax liability. However, the Tribunal examined the agreements between the hospitals and doctors, finding shared obligations, responsibilities, and benefits, rather than specific infrastructural support services. The revenue-sharing model was deemed for healthcare services provided by the hospitals, not business support services. The Tribunal highlighted the distinction between a professional activity and a commercial one, emphasizing that doctors' services were of a professional nature, not commercial.Issue 2: Exemption under Health Care ServicesThe appellant hospitals contended that under the negative list regime from July 2012, health care services were exempt from service tax. They argued that the revenue's claim to tax a portion of the consideration received for health care services as business support service was not valid, as it would defeat the exemption provided to clinical establishments for health care services.Analysis: The Tribunal referred to Notification No. 25/2012, which exempted clinical establishments providing health care services from service tax. The Tribunal held that taxing a portion of consideration received for health care services would negate the exemption and found no legal justification to tax the hospitals for supporting the business of doctors. The Tribunal dismissed the Revenue's appeal, aligning with the Commissioner's decision that the hospitals were not providing services to doctors but extending health care services to patients.In conclusion, the Tribunal ruled in favor of the hospitals, setting aside the tax liability under Business Support Service and upholding the exemption for health care services. The judgment emphasized the nature of services provided by the hospitals and the distinction between professional and commercial activities in determining tax liabilities.