TaxTMI 
TaxTMI 
2025 (11) TMI 1700
X X X X Extracts X X X X
X X X X Extracts X X X X
....ces provided to Diagnostic Service Providers Demand of Service Tax on Business Support Services provided to Doctors/ Consultants Period 01.04.2013 to 31.03.2014 01.04.2008 to 31.03.2014 Impugned OIA 73/ST/DLH/2016 dated 30.06.2016 74/ST/DLH/2016 dated 30.06.2016 OIO 26/ST/ADC/SM/RTK/2014-15 dated 01.01.2015 32-33/ST/ADC/AK/RTK/2014-15 dated 02.03.2015 SCN 73/ST/ADC/HQ/HSR/14-15 dated 21.10.2014 32/ST/ADC/HQ/HSR/13-14 dated 09.10.2013 and 75/ST/ADC/HQ/HSR/14-15 dated 21.10.2014 Demand Rs.26,56,018/- Rs.14,32,921/- and Rs. 7,66,714/- Interest Under Section 75 Under Section 75 Penalty Under Sections 76 & 77 Under Sections 76, 77 & 78 2. Briefly stated facts of the present case are that the both the Appellants are registered with the Service Tax Department under 'Health Service' and 'Renting of Immovable Property Service'. 2.1 Transaction between the Appellant-I and Diagnostic Service Providers: M/s Om Savitri Jindal Charitable Society ('the Appellant-I') entered into agreements with Lal Pathlabs Pvt Ltd, Mangalam Lab, 360 Degrees Healthcare Pvt Ltd and Clearview Healthcare Pvt Ltd ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed 01.01.2015 and 02.03.2015, confirmed the demand of service tax amounting to Rs.26,56,018/- against the Appellant-I and Rs.21,99,635/- against the Appellant-II, along with interest and penalty, after giving the cum-tax benefit. Aggrieved by both the impugned OIOs, the Appellants filed appeals before the learned Commissioner (Appeals), who rejected their appeals and upheld the OIOs; hence, the Appellants have preferred the present appeals before us. 3. Heard both the sides and perused the material on records. 4. The learned Counsel for the Appellants has filed common written submission in both the appeals which have been taken on record. 4.1 The learned Counsel further submits that the issues involved in both the appeals, have already been decided in the Appellants' favour at the Appellate Authority level as well as the Tribunal level, for the previous as well as subsequent periods. In this regard, she provides the following chart of the Orders passed by the Tribunal and the Appellate Authority in Appellants' favour on the issues involved: Order Party's name Period Issue Final Order No. 60579/2024 dated 16.10.2024 passed by the T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which are on record; as per the agreements, the parties have agreed for a revenue sharing model on principal-to-principal basis out of the revenue generated from the diagnostic services provided by DSPs and healthcare services provided by Doctors/Consultants with the help of infrastructure and other facilities provided by the Appellants in an agreed percentage. She also submits that the entire amount received by the Appellant-I in respect of the services rendered by DSPs is booked under the laboratory charges and share of DSPs is debited after DSPs raise the monthly bill as per agreed rates; similarly, the Appellant-II books the amount received from the patients against services provided by the Doctors under various ledgers like charges for admission fee, anaesthesia fee, laboratory charges etc; later on, this ledger is debited with the amount to be shared with the Doctors as per the agreed percentage. She also refers the Circular No. 109/03/2009-ST dated 23.02.2009 which clarifies that when two contracting parties enter into revenue sharing arrangement then both the parties act on principal-to-principal basis and there is no provision of service amongst the parties. She further su....
X X X X Extracts X X X X
X X X X Extracts X X X X
....88 CESTAT New Delhi • M/s Diabetic Association of India vs. CST - 2025 (6) TMI 1964 CESTAT Mumbai • CCE & ST, Goa vs. M/s Goa Golf Club Pvt Ltd - 2023 (5) TMI 1026 CESTAT Mumbai • M/s Gujarmal Modi Hospital & Research Centre for Medical Sciences vs. CST - 2019 (1) TMI 378 CESTAT New Delhi 4.4 The learned Counsel further submits that the demand proposed by the show cause notice dated 09.10.2013 is partially time barred because the said show cause notice has invoked the extended period of limitation to raise demand for the period 2008-09 to 2012-13 against the Appellant-II. She also submits that the department has not brought anything on record to establish that the Appellant-II had suppressed the material facts from the department. For this, she relies on the following decisions: • OP Jindal Institute of Cancer & Research vs. CCE - 2024 (10) TMI 824 CESTAT Chandigarh • Taj GVK Hotels & Resorts Ltd vs. CCE - 2025 (7) TMI 930 CESTAT Chandigarh She also submits that the present case involves interpretation of complex legal provisions; the issue of taxability of the amount retained by the hospital out of the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ppellant. We find that the only issue involved in the present case is whether the appellant is liable to pay service tax under the category of 'Support Service of Business or Commerce' as defined under Section 65(104c) read with Section 65(105)(zzzq) of the Finance Act, 1994 to the DSPs by providing them infrastructure, equipments, facilities and administrative support. For deciding this issue, it is essential to reproduce the definition of 'Support Service of Business or Commerce', which is reproduced herein below: "Section 65(104c) : "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [Operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. [Explanation - For the purposes of this clause, the expression "inf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, referral doctors, insurance companies, hospitals and any other networking of LPL and performed in the LPL lab inside the Hospital premises, LPL and the Hospital will share revenue in the proportion of 95:5. This will also be applicable to tests sent outside India. • The revenue in respect of work referred to by the Hospital shall be collected by the Hospital and LPL will collect revenue for the balance work. The accounts in respect of the Revenues collected by the Hospital will be audited by the LPL at its own cost and the Hospital hereby agrees to make available such audited accounts to LPL for reconciliation to determine the mutual shares. The Revenues shall be shared on a monthly basis. • As per details given by the Hospital, the yearly net revenues at present is Rs. 1.6 cr. which has been taken as basis for arriving at the above mentioned revenue share. The hospital will help LPL and try to make sure that at least this revenue is generated out of the pathology lab. Any deviation beyond 10% on lower side will attract a revision of the revenue sharing clauses mutually. • The Hospital will be responsible for all cash collections for the te....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llant with DSPs as per the contract. 11. Further, we are of the view that mere providing of a building along with some basic amenities like electricity, water, sewage etc cannot be qualified as 'support service' for running a business. These facilities are provided to the DSPs to enable them to provide the services to the appellant; and without these facilities, DSPs would not be in the position to provide the service to the appellant. We also note that it is the appellant who is engaged in running the Hospital for providing the healthcare services to public and the diagnostic services provided by the DSPs are an integral part of such healthcare services provided by the appellant. Healthcare services are fully exempted from the tax w.e.f. 25.04.2011 vide Notification No. 30/2011-ST dated 25.04.2011. This notification was rescinded w.e.f. 01.07.2012, but healthcare services are not liable to service tax in the negative list regime also. 12. We also find that the case-laws relied upon by the appellant regarding the revenue-sharing arrangement clearly held that if there is a revenue-sharing arrangement on principal-to-principal basis to further their mutual int....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd 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 arrangement are for joint benefit of both the parties with shared obligations, responsibilities and benefits. The agreements do not specify the specific nature or list of facilities which can be categorized as infrastructural support to the doctors. The revenue model, as agreed upon between the contracting parties also, did not refer to any consideration attributable to such infrastructural support service. 6. The proceedings by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 activity and an activity of a commercial character" : "...a "profession"... involves the idea of an occupation requiring either purely intellectual skill, or of manual skill controlled, as in painting and sculpture, of surgery, by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production or sale or arrangements for the production or sale of commodities" "...a profe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ll show that a clinical establishment providing health care services are exempted from services tax. The view of the Revenue that is 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 ground that they have supported the commerce or business of doctors by providing infrastructure. We find that such assertion is neither factually nor legally sustainable." 4.3 Revenue has in their submissions failed to distinguish the facts in hand from the facts as were considered by the CESTAT, in the case of Sir Ganga Ram Hospitals, supra. We also find that thi....