2019 (5) TMI 662 - AT - Service Tax

Classification of services - Health insurance services or not - HELD THAT - The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider, then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994. We have gone through the definition and note that the requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider, then it satisfies the definition of health services provided under Section 65(105)(zzzzo) of Finance Act, 1994. The appellants during the relevant period had provided said services and therefore there is no reason for us to interfere with the impugned orders - appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether hospitals providing health services are liable to pay Service Tax under Section 65(105)(zzzzo) of Finance Act, 1994 for services provided to individuals covered by health insurance schemes.
2. Whether the payment made directly by an insurance company to a hospital for health services satisfies the definition of taxable service under Section 65(105)(zzzzo) of Finance Act, 1994.
3. Interpretation of the definition of health services under Section 65(105)(zzzzo) of Finance Act, 1994 in relation to payments made by insurance companies.

Analysis:

1. The case involved hospitals providing health services to individuals covered by health insurance schemes between 01.07.2010 to 30.04.2011. The hospitals received payments directly from an insurance company for services rendered to individuals below the poverty line under a government health insurance scheme. The issue was whether Service Tax amounting to specific sums should be demanded from the hospitals based on the services provided.

2. The Appellate Tribunal considered the argument raised by the hospitals' counsel that since the health services were provided under a government scheme, Service Tax should not be levied. The counsel also cited a judgment from the Hon'ble Madras High Court in support of this argument. However, the Revenue authorities contended that as per the definition of taxable service under Section 65(105)(zzzzo) of the Finance Act, 1994, if the payment for the service is made directly to the hospital by the insurance company, it satisfies the definition of health services.

3. The Tribunal analyzed the definition of health services under Section 65(105)(zzzzo) of the Finance Act, 1994, which required that the treatment be provided by the service provider and the payment be made directly by the insurance company to the service provider. The Tribunal noted that the Madras High Court had remanded a similar matter to consider it afresh. However, in this case, the Tribunal held that since the hospitals had provided the services as per the definition during the relevant period, there was no basis to interfere with the orders confirming the demands and penalties. As a result, the appeals filed by the hospitals were rejected.

This detailed analysis outlines the key issues addressed in the judgment and provides a comprehensive understanding of the Tribunal's decision regarding the liability of hospitals to pay Service Tax for health services provided under specific circumstances.