2018 (7) TMI 1387 - AT - Service Tax

Tribunal rules in favor of hospital, rejects service tax demands, emphasizes distinction between healthcare and business support services

The Tribunal ruled in favor of the hospital, rejecting the service tax demands under Business Support Service and upholding the restriction of the demand ... Business Support Services - “collection charges/ facilitation fee” retained by the appellants - Revenue held a view that such charges / fee retained by the appellant formed a taxable consideration for the service of infrastructural support provided by the appellants to the doctors to enable the doctors to carry-out their work in the hospital - Held that:- The identical issue has been considered by the Tribunal and decided in favour of the appellants in the case of Sir Ganga Ram Hospital & Others [2017 (12) TMI 509 - CESTAT NEW DELHI], where it was held that there is no justification for levy of Service Tax on such amount retained by the hospital under ‘Business Support Services’. Even for the period w.e.f. 01.07.2012, the Tribunal has held that there is no justification for levy of service tax - Demand with interest and penalties set aside. Regarding the service tax liability under the category of ‘Renting of Immovable Property’, the same have been admitted by the appellant and has also been paid alongwith interest prior to issue of show cause notice. Appeal allowed - decided in favor of appellant. Issues:1. Whether the retained collection charges/facilitation fee by the appellants are liable to service tax under Business Support Service.2. Whether the order for payment of service tax on the retained amount should be for the entire period or restricted to the normal time limit.3. Whether the service tax liability under the category of 'Renting of Immovable Property' should be upheld.Analysis:1. The appeals challenged an Order-in-Original regarding the liability of a Charitable Hospital to pay service tax on collection charges retained from patients for infrastructural support provided to doctors. The Revenue contended that such charges were taxable under Business Support Service. The Tribunal, citing a previous case, held that the arrangement between the hospital and doctors did not constitute infrastructural support service. The Tribunal emphasized that the hospital was engaged in providing health care services, not business support services, and rejected the demand for service tax, interest, and penalties.2. The Revenue also appealed against the Order-in-Original, arguing that the service tax demand should cover the entire period, not just the normal time limit. However, the Tribunal, following precedent, dismissed the Revenue's appeal and upheld the decision to restrict the service tax demand to the normal period of limitation.3. The hospital admitted the service tax liability under 'Renting of Immovable Property' and paid the amount with interest before the show cause notice. Despite this admission, the adjudicating authority did not uphold the payment. The Tribunal, acknowledging the hospital's compliance, ordered the appropriation of the admitted service tax liability.In conclusion, the Tribunal ruled in favor of the hospital, rejecting the service tax demands under Business Support Service and upholding the restriction of the demand to the normal time limit. Additionally, the Tribunal directed the appropriation of the admitted service tax liability under 'Renting of Immovable Property'. The judgment highlighted the importance of distinguishing between health care services and business support services in determining service tax liabilities.