2026 (4) TMI 1660

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....der which the hospital affiliated under the Manipal University offered a discount at fixed rate to the card holders for treatment. Also, they have incurred certain expenditure towards availing of legal services from the advocate even though as a business entity, liable to pay applicable tax on the legal services on Reverse Charge Mechanism (RCM) basis but failed to discharge the same from 01.07.2012. Thus, they were directed to make service tax payment towards the said services by the Range Superintendent through its letter dated 19.11.2014 and later, show-cause notice was issued on 26.03.2015 for recovery of the service tax of Rs.2,06,79,228/- for providing medical insurance service (Manipal Health Security Scheme) for the period from July 2012 to August 2014; an amount of Rs.72,92,829/- for providing Manipal Healthcare Card during the period from July 2012 to August 2014 and Rs.22,59,052/- for receiving legal services from the advocates during the said period for July 2012 to August 2014 with interest and penalty. On adjudicating, the demand was confirmed with interest and penalty. Hence, the present appeal. 3. At the outset, the learned advocate has submitted that the appella....

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....ficiaries. This policy documents along with Manipal Arogya Suraksha Scheme clearly identifies the insurer as the service provider. The beneficiaries are also aware that their insurance cover is underwritten and administered by the insurance company and not by the appellant. 5. Further, he has submitted that the appellant is a charitable organisation duly registered under Section 12A of the Income Tax Act, 1961, therefore, in view of the Notification No.25/2012-ST dated 20.06.2012, the service provided by the appellant are exempt from whole of service tax leviable under Section 65B of the Finance Act, 1994. Further, they have submitted that appellant is a Public Trust registered under Indian Trust Act, 1982. Being a Trust, the appellant is not a body corporate, it lacks independent legal personality, has no perpetual succession, and has no statutory authority to carry on business of insurance. Further, the appellants are not registered with IRDAI, hence not authorised to provide health insurance as per Section 3 of the IRDA (Health Insurance) Regulations, 2013. He has submitted that even if it is treated as a 'service' as per the scheme documents, since it provides a comprehensiv....

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....uide dated 20.06.2012. 7. On confirmation of the service tax demand relating to legal services received by the appellant from the advocate, he has submitted that the impugned order confirms the service tax demand on them on reverse charge basis erroneously as the said provision is applicable only to 'Business Entity'. Referring to the definition of 'Business Entity' under Section 65B(17) of the Finance Act, 1994, he has submitted that it relates to any person ordinarily carrying out any activity relating to industry, commerce or any other business. The word 'Business' denotes a systematic, organised activity undertaken with a set purpose or profit motive. In support, he has referred to the judgment in the case of Narain Swadeshi Mills v. Commissioner of Excess Profits Tax: AIR 1955 SC 176; Bakhtawar Singh Balakrishnan vs. Union of India: AIR 1983 Del. 201; and S. Mohan Lal vs. R. Kondiah: AIR 1979 SC 1132. 8. Further, he has submitted that appellant is a Public Trust registered under Indian Trust Act, 1982 and Trust does not have a separate legal personality, cannot carry on business in its own name as it has no lawful authority of incorporation, it is merely an obligation an....

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....bmitted that issuance of Arogya Card also does not come under the scope of exempted service. Also, since theirs is Business Organisation as defined under Section 65B(17) of the Finance Act, 1994, hence, their activities are leviable to service tax. 11. Heard both sides and perused the records. The issues involved in the present appeals for consideration is whether (i) the services provided by the appellant under Manipal Arogya Suraksha Scheme is leviable to service tax; (ii) Arogya Card Scheme is exempted under Mega Notification No.25/2012 dated 20.06.2012; (iii) Legal Charges received by the appellant is chargeable to service tax under Reverse Charge Mechanism (RCM) basis as per Rule 2(1)(d)(i)(D)(II). 12. Undisputed facts of the case are that the appellant has been providing Manipal Healthcare Security Scheme to its students, staff and their family members, and collecting the premium amount and depositing the same with insurance companies after making good the deficit of premium, if any, as a welfare measure. It is the contention of the appellant that they do not retain any amount of the said premium and the entire premium is paid to the insurance companies, hence, no servi....

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.... it is an undisputed fact that any deficit to the premium required to be paid are made good by the appellant. In the appeal paper-book, the appellant has enclosed the group insurance policy, group medicalim insurance policy issued by the National Insurance Company Ltd. along with the list of beneficiaries and the premium amount paid. In these circumstances, we are of the opinion that since no service has been rendered by the appellant, confirmation of service tax on the said activity cannot be sustained. 15. On the issue of levy of service tax on Manipal Arogya Card/ Manipal Health Card issued by the appellant, it is argued on behalf of the appellant that as a dual purpose of compliance with the Regulations and Standards prescribed by the MCI and also to provide facilities to the Public at a nominal cost, the said card has been introduced and the card holder is entitled to avail the benefit of health services from the medical college run by the appellant. The relevant portion of Mega exemption Notification No.25/2012 dated 20.06.2014 reads as: Exemptions from Service tax - Mega Notifications - Notification No. 12/2012-S.T. superseded In exercise of the powers c....

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....rvices by a clinical establishment, an authorised medical practitioner or para-medics as mentioned under the said notification. Since the appellant is a medical college and providing health facilities which has been as per the Rules framed by the MCI, therefore, it is incorrect to say that it is not a clinical establishment and not providing healthcare services to the beneficiaries of the card issued. Therefore, the beneficiaries of the card since avail the benefit of health services from the appellant, accordingly, the same is covered by the Mega Exemption Notification No. 25/2012-ST dated 20.06.2012. 18. On the issue of levy of service on 'Legal Services' received by the appellant under RCM basis under Rule 2(1)(d)(i)(D)(II) of the Service Tax Rules, 1994. It is the claim of the appellant that they are registered as a Charitable Trust acknowledged under Section 12AA of the Income Tax Act being not a 'Business Entity' as defined under Section 65B(17) of the Finance Act, 1994, therefore, not required to pay service tax on the Legal Services received by them during the period. The learned Commissioner on the other hand confirmed the demand observing that appellants are also carry....