Health care revenue-sharing is not Business Support Service unless distinct infrastructural support is proved; admitted renting tax may be appropriated.

A hospital's retention from patient collections under a revenue-sharing arrangement with consulting doctors was analysed as part of a mutually beneficial health care model, not as consideration for a distinct infrastructural support service. Because the agreements did not establish identifiable support in relation to business or commerce, and the hospital was providing exempt health care services, the retained share was treated as outside Business Support Service tax. Separately, service tax and interest paid on renting of immovable property before the show cause notice were treated as an admitted liability and could be appropriated against that obligation.

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Issues: (i) Whether the amount retained by the hospital from patient collections was liable to service tax as Business Support Service on the footing that the hospital provided infrastructural support to consulting doctors. (ii) Whether the service tax paid on renting of immovable property, together with interest, prior to issuance of the show cause notice was liable to be appropriated.

Issue (i): Whether the amount retained by the hospital from patient collections was liable to service tax as Business Support Service on the footing that the hospital provided infrastructural support to consulting doctors.

Analysis: The arrangement between the hospital and the doctors was found to be a mutually beneficial contractual engagement for providing health care services to patients, with a revenue-sharing model and shared obligations. The retained amount was not shown by the agreements to be consideration for any identifiable infrastructural support service rendered to doctors. The activity did not answer the description of service provided in relation to business or commerce, since the doctors were engaged in medical profession and the hospital was itself providing exempt health care services as a clinical establishment. Levying tax on the hospital's share would defeat the exemption granted to health care services under the service tax notifications.

Conclusion: The amount retained by the hospital was not taxable as Business Support Service, and the demand of service tax, interest and penalties was set aside.

Issue (ii): Whether the service tax paid on renting of immovable property, together with interest, prior to issuance of the show cause notice was liable to be appropriated.

Analysis: The liability under the head of renting of immovable property was admitted by the hospital and the tax with interest had already been paid before issuance of the show cause notice. In such circumstances, the amount was not in dispute on merits and could be adjusted towards the admitted liability.

Conclusion: The payment was rightly appropriated.

Final Conclusion: The service tax demand on the alleged Business Support Service was rejected, while the admitted liability under renting of immovable property was sustained by appropriation, and both appeals were disposed of accordingly.

Ratio Decidendi: A hospital engaged in providing health care services through contractual consultants does not render taxable Business Support Service merely because it shares collections with doctors, unless a distinct infrastructural support service in relation to business or commerce is established.

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