Health care service exemption prevails where hospital-doctor revenue sharing is integral to medical treatment, not a separate support service.

A hospital's revenue-sharing arrangement with consultant doctors was held to be part of exempt health care services, not a separate taxable business support service. The hospital's facilities and administrative support were integral to delivering medical treatment, and the arrangement created mutual obligations rather than a service rendered to doctors for consideration. As clinical establishments providing health care services were covered by exemption notifications, the hospital's share of receipts could not be taxed independently as business support service. The Department's attempt to treat the arrangement as a taxable support service was therefore unsustainable.

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Issues: Whether the hospital's arrangement with consultant doctors constituted taxable business support service or whether it formed part of exempt health care services.

Analysis: The arrangement between the hospital and the doctors was found to be mutually beneficial, with shared obligations, responsibilities, and revenue-sharing. The facilities and administrative support provided by the hospital were integral to the delivery of health care services and not a separate service rendered to the doctors for consideration. Since clinical establishments providing health care services were exempt from service tax under the relevant notifications, the Department's attempt to tax the hospital's share of receipts as business support service was not legally sustainable.

Conclusion: The hospital did not render taxable business support service to the doctors and the receipts were covered by the exemption for health care services; the finding was in favour of the assessee.

Ratio Decidendi: Where a hospital engages doctors under a revenue-sharing arrangement for providing health care services, and the facilities provided are incidental to that service, the hospital's share of receipts cannot be taxed as a separate support service if the underlying clinical establishment is exempt.

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