Classification of Health Care versus Cosmetic Surgery services remanded for procedure-specific analysis; tax liability to be recalculated.

Classification of services focuses on whether procedures are healthcare services or cosmetic and plastic surgery; the adjudicator failed to analyse each procedure and the matter is remanded for detailed, service-by-service findings, with the impugned order set aside and duty liability recalculated. The tribunal held the provider qualifies as a clinical establishment and treatments are by authorised medical practitioners, but some procedures may qualify as healthcare only when aimed at restoration or reconstruction. Best judgement assessment was justified due to refusal by a software owner to supply data, so the assessment under that method stands. Denial of cum-tax benefit was rejected because returns and audited accounts were filed and the issue is one of interpretation, precluding invocation of the extended limitation period.

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Issues: (i) Whether the services rendered by the appellant fall within "cosmetic and plastic surgery" (taxable) or "healthcare services" (exempt under Notification No.25/2012-ST); (ii) Whether the adjudicating authority could rely on Kachcha registers and apply best-judgement assessment under Section 72; (iii) Whether the adjudicating authority exceeded the scope of the show cause notice by confirming tax beyond the proposed amount; (iv) Whether the appellant is entitled to cum-tax benefit under Section 67(2); (v) Whether the extended period of limitation can be invoked.

Issue (i): Whether the services rendered by the appellant are taxable as cosmetic and plastic surgery or exempt as healthcare services under Notification No.25/2012-ST.

Analysis: The Tribunal examined statutory definitions (Section 65(105)(zzzzk); Section 65B(44); Notification No.25/2012-ST, para 2(t)) and prior decisions distinguishing cosmetic/plastic procedures from healthcare interventions (e.g., bariatric surgery, treatments for recognised illnesses). The Bench found that the adjudicating authority did not undertake service-by-service analysis recording diagnosis/procedure and post-treatment care and instead took an overall view of physical enhancement.

Conclusion: The matter is remitted to the adjudicating authority to record specific findings for each listed service on whether it is taxable cosmetic/plastic surgery or an exempt healthcare service.

Issue (ii): Whether reliance on the appellant's Kachcha registers and applying best-judgement assessment under Section 72 was justified.

Analysis: The Tribunal noted Kachcha registers reflect tentative appointments/estimates and actual income is reflected in audited balance-sheets and bank records. The Department resorted to best-judgement after software owner refused data, but assessment based on Kachcha registers was not supported.

Conclusion: No reliance can be placed on Kachcha registers for assessment; best-judgement assessment invoked due to unavailability of software data may be justified procedurally but assessments must exclude Kachcha register figures and be recalculated by the adjudicating authority.

Issue (iii): Whether the adjudicating authority confirmed tax beyond the amount proposed in the show cause notice.

Analysis: The SCN proposed Rs.2,61,94,416; the adjudicating authority confirmed Rs.2,62,91,823, thereby confirming an amount not proposed in the SCN.

Conclusion: The excess amount (Rs.97,407) confirmed beyond the SCN is unsustainable and must be deducted on reassessment.

Issue (iv): Whether the appellant is entitled to cum-tax benefit under Section 67(2).

Analysis: Authorities and precedent were considered distinguishing cases where gross receipts must be treated as inclusive of tax; the Tribunal found the context and facts warranted reassessment on valuation and allowed the appellant to claim cum-tax benefit pending recalculation.

Conclusion: The appellant is entitled to avail cum-tax benefit; the adjudicating authority shall recalculate liability accordingly.

Issue (v): Whether the extended period of limitation can be invoked against the appellant.

Analysis: The Tribunal observed the appellant filed ST-3 returns and maintained audited accounts; the controversy is interpretative as to classification of services. In view of precedent, extended period for suppression cannot be invoked where issue is one of interpretation and no deliberate suppression is shown.

Conclusion: The extended period of limitation cannot be invoked.

Final Conclusion: The impugned order is set aside and the appeal is allowed by way of remand to the adjudicating authority to determine, with reasoned findings and recalculation, (a) classification of each service as taxable or exempt, (b) deduction of the amount confirmed beyond the SCN, (c) exclusion of Kachcha registers from assessment, (d) application of cum-tax benefit, and (e) non-invocation of the extended period of limitation.

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