2019 (11) TMI 176 - AT - Service Tax

Health services - exemption under N/N. 30/2011-ST dated 25.04.2011 w.e.f. 01.05.2011 - period 01.07.2010 to 30.04.2011 - Levy of service tax - Extended period of limitation - HELD THAT - Admittedly the demand for the period 01.07.2010 to 30.04.2011 stands raised by way of issuance of show cause notice dated 21.10.2015 i.e. by invoking the longer period of limitation. The dispute relates to the interpretational issue i.e. as to whether the cost of the medicines are required to be formed part of the value of the services or not. The original adjudicating authority had extended the benefit to the appellant. This fact, by itself, shows that the issue is a bona fide issue of interpretation and is capable of being interpreted in two different maners. In such a scenario no mala fide can be attributed to the assessee. The impugned order of Commissioner(Appeals) on limitation is not sustainable - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of whether the cost of medicines should be included in the value of services for Service Tax liability calculation. Application of the extended period of limitation for raising a demand.

Analysis:

1. Interpretation of Cost of Medicines: The case involved a dispute regarding whether the cost of medicines consumed in providing health services should be included in the value of services for the purpose of calculating Service Tax liability. The original adjudicating authority allowed the deduction for the cost of medicines, but the Commissioner(Appeals) reversed this decision. The appellate tribunal noted that the issue was a bona fide matter of interpretation capable of being viewed in different ways. Consequently, the tribunal set aside the decision of the Commissioner(Appeals) and reinstated the order of the original adjudicating authority, indicating that no mala fide intent could be attributed to the appellant in this regard.

2. Application of Extended Period of Limitation: The dispute also revolved around the application of the extended period of limitation for raising a demand for Service Tax liability. The show cause notice was issued in 2015, covering the period from July 2010 to April 2011, based on the longer limitation period. The Commissioner(Appeals) upheld the use of the extended period due to the appellant's alleged non-disclosure of providing health services. However, the tribunal found that since the issue of including the cost of medicines was genuinely open to interpretation, the Commissioner(Appeals)' decision on limitation was deemed unsustainable. Therefore, the tribunal set aside the decision on limitation and restored the original adjudicating authority's order.

3. Conclusion: In conclusion, the appellate tribunal's judgment focused on the interpretation of the inclusion of the cost of medicines in the value of services for Service Tax calculation and the application of the extended limitation period for raising a demand. The tribunal emphasized the genuine interpretational dispute regarding the cost of medicines and ruled in favor of the appellant, setting aside the decision of the Commissioner(Appeals) and reinstating the original adjudicating authority's order.