2023 (4) TMI 442 - AT - Service Tax

Refund of Service tax - service tax paid under protest - Cosmetic Surgery and Plastic Surgery service - Hair transplantation - surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma of the definition of 'Cosmetic And Plastic Surgery Services' provided under sub-clause(zzzzk) of clause(105) of Section 65 of the Finance Act, 1994 - HELD THAT - It can be seen that Hair Transplant is neither undertaken to restore or reconstruct anatomy or its functions, nor the procedure of hair transplant restores developmental abnormalities degenerative diseases, injury or trauma. It is found that hair transplant is a medical procedure to improve outer look of the body for time being and it does in any way contributes to the anatomy or functions of human body. The medical procedure undertaken by the appellant is a process which is not opted by every person affected with hair loss, it is only a few affluent or self physical appearance conscious persons who undertake such surgery, the other persons affected by hair loss also live a normal life without any 'sub-normal' condition as claimed by learned Chartered Accountant. It is also normally seen that the Hospitals who undertake procedure of Hair Transplantation advertise/ display their activity not as a disease to be cured but they claim that the procedure taken by them enhances physical appearance. So, only diseases such as 'Congenital atrichia or 'hypotrichosis' which are unique conditions of hair loss which exhibit at birth or early stages during childhood could only be considered congenital defects for the purpose of exemption. The Hair Transplant is a cosmetic surgery and liable to the service tax levy - the impugned order upheld - appeal dismissed.

Summary

Issues:
The issues involved in the judgment are whether the activity of "Hair Transplantation" falls under the taxable category of 'Cosmetic and Plastic Surgery Services' and whether it is liable for service tax.

Issue 1: Taxability of Hair Transplantation Service
The appellant, a medical practitioner providing 'Hair Transplantation' services, contended that the service should not be considered taxable under the category of 'Cosmetic Surgery and Plastic Surgery Services' as defined under the Finance Act, 1994. The appellant argued that Hair Transplantation is a restorative surgery, not a cosmetic one, aimed at reconstructing missing body parts due to genetic defects. The appellant highlighted that the procedure aims to restore normalcy and confidence, rather than enhance beauty. The appellant relied on previous tribunal decisions to support their argument.

Issue 2: Interpretation of Taxable Service Definition
The dispute centered around the interpretation of the definition of taxable service under clause (zzzzk) of Section 65 of the Finance Act, 1994. The appellant argued that Hair Transplantation does not fall under the exclusion clause of surgeries undertaken to restore or reconstruct anatomy affected by congenital defects, abnormalities, diseases, injury, or trauma. The appellant emphasized that the procedure aims to restore normal anatomy and functions affected by genetic defects, making it a restorative surgery rather than a cosmetic one.

Judgment Summary:
The Appellate Tribunal, after considering the arguments presented, held that Hair Transplantation is indeed a cosmetic surgery and is liable for service tax. The Tribunal rejected the appellant's contention that the procedure falls under the exclusion clause of surgeries aimed at restoring anatomy or functions affected by congenital defects, abnormalities, diseases, injury, or trauma. The Tribunal emphasized that Hair Transplantation is primarily undertaken for cosmetic purposes to enhance physical appearance, rather than to restore anatomy or functions affected by specific conditions. The Tribunal concluded that the procedure does not contribute to the anatomy or functions of the human body and is opted for by individuals seeking cosmetic enhancements. Therefore, the Tribunal upheld the tax liability on Hair Transplantation services and dismissed the appeals.