Revenue-sharing with doctors was not Business Support Service; hospital's retained share fell within exempt healthcare activity.

A hospital's retained share under a revenue-sharing arrangement with visiting doctors was held not to constitute taxable Business Support Service, because the arrangement was for their joint benefit and not a contract to provide infrastructural support to doctors for business or commerce. The hospital was found to be rendering healthcare services to patients, and the retained amount was intrinsically linked to that exempt healthcare activity. On that footing, the service tax demand, interest, and penalties were unsustainable, and the extended period could not be invoked on the facts accepted by the Tribunal.

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Issues: Whether the amount retained by a hospital under a revenue-sharing arrangement with visiting doctors or consultants was chargeable to service tax as Business Support Services, and whether the consequential demands, interest, penalties, and invocation of the extended period could be sustained.

Analysis: The arrangement between the hospital and the doctors was found to be for their joint benefit, with shared obligations, responsibilities, and revenue, and not a contract for providing infrastructural support to doctors in relation to business or commerce. The hospital was engaged in providing healthcare services to patients, and the retained amount was intrinsically connected with that healthcare activity. The Tribunal followed the settled view that doctors are engaged in the medical profession and the arrangement did not disclose any identifiable taxable Business Support Service. It was also noted that healthcare services were exempt under the applicable exemption regime, and taxing the hospital's share of the collection as business support would defeat that exemption.

Conclusion: The demand of service tax, interest, and penalties was unsustainable, and the extended period could not be upheld on the facts accepted by the Tribunal.

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