TaxTMI 
TaxTMI 
TaxTMI 
2017 (12) TMI 509
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....ors are provided space in the hospitals with required facilities to attend to the patients coming to the hospitals, run by the appellants. These doctors engaged on contract basis are paid professional fee in terms of the contracts. Fee paid to the doctors is computed based on a pre-determined ratio on the amount received by the appellants from the patients. The Revenue entertained a view that the "collection charges/facilitation fee" retained by the appellants are liable to service tax under the category of Business Support Service for the period prior to 01.07.2012 and are a taxable service post negative list also. The 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. The original authorities in different impugned orders concluded that appellants provided infrastructural support service to consultant doctors and, as such, are liable to pay service tax under the category of Business Support Services. They also imposed various penalties on the appellants. 2. Ld Advocate Shri B.R. Narsimha....
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....y, rendered in connection with such health care services will be taxed will defeat the very purpose of exemption to medical services. The activities of the appellant, even if it is considered as services to doctors, is not limited to provision of space or infrastructure but also includes various other services like blood bank, emergency units, operations theaters, which are essentially for diagnosis and treatment of patients. These are typically health care services which are clearly exempt. e) The demand cannot be sustained for extended period as there is no element of fraud, willful mis-statements etc. The demand was raised by the Revenue based on examination of documents maintained by the appellant during the course of audit by the officers. Accordingly, the demand for extended period and imposition of penalties are not sustainable. 2. Shri B.S.Manoj, ld Advocate appearing for one of the appellant hospital (M/s Appollo) mainly submitted again on the above lines. He further stated that the patients entry and follow-up in the appellant hospital premises is monitored and regulated by the appellant hospital only. The patients are provided with ID cards and all the contacts and fo....
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....dle messages, secretarial services, internet and telecom facilities, pantry and security." 5. The claim of the Revenue is that the appellants have provided infrastructural support service to various doctors. As a consideration for such support, they have retained a part of the amount collected from visiting patients. We have perused some of the agreements/appointment arrangements entered into between the appellants hospitals and the individual doctors. Typically, the arrangement contains details like duration of time for consultation, the obligations on the part of the doctors, fee to be paid, procedure for termination of agreement, etc. The agreements generally talk about appointment of consultants to provide services to the patients who will visit or admitted in the appellants hospital. The doctors will receive a percentage of share of the collection from the patients in case of consultation, procedures and surgeries done by them. In some cases, there is a provision for treating patients from low economic background without any financial benefits. On careful consideration of various terms and conditions and the scope of arrangement, we are of the considered view that such arrang....
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....g doctors. We do not find any business support services in such arrangement. 7. The inference made by the Revenue that the retained amount by the hospital is to compensate the infrastructural support provided to the doctors can be examined in another angle also. Reading the statutory provisions for BSS, we note that the services mentioned therein are "provided in relation to business or commerce." As such, to bring in a tax liability on the appellant hospital, it should be held that they are providing infrastructural support services in relation to business or commerce. That means, the doctors are in business or commerce and are provided with infrastructural support. This apparently is the view of the Revenue. We are not in agreement with such proposition. Doctors are engaged in medical profession. As examined by Hon'ble Gujarat High Court in Dr KK Shah (supra), though in an income-tax case, we note that there is a discernable difference between "business" and "profession". The Gujarat High Court referred to decision of Hon'ble Supreme Court in Dr Devender Surtis AIR 1962 SC 63. The Supreme Court observed as below: "There is a fundamental distinction between a professional activ....
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....ay of transportation of the patient to and from a clinical establishment but does not include their transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of both affected due to congenial defects, developmental abnormalities, injury or trauma." 11. These two provisions available in Notification No.25/2012 will show that a clinical establishment providing health care services are exempted from service tax. The view of the Revenue that in spite of such exemption available to health care services, a part of the consideration received for such health care services from the patients shall be taxed as business support service/taxable service is not tenable. In effect this will defeat the exemption provided to the health care services by clinical establishments. Admittedly, the health care services are provided by the clinical establishments by engaging consultant doctors in terms of the arrangement as discussed above. For such services, amount is collected from the patients. The same is shared by the clinical establishment with the doctors. There is no legal justification to tax the share of clinical establishment on the grou....