2023 (12) TMI 953 - AT - Service Tax

Levy of service tax - amount retained by the appellant from fees of the Doctor on account of infrastructure support to the doctor - non compliance of the procedure of Rule 6(3A) can lead to a demand under Rule 6(3) despite the fact the appellant have reversed the amount in terms of Rule 6(3A) of Cenvat Credit Rules or not - extended period of limitation. Whether the appellant is liable to pay service tax on the amount retained from the fees received on behalf of the doctors for treatment of patient? - HELD THAT - This issue is no longer res-integra as in the various judgments, it has been held that the part of the amount of doctor s fees retained by the respondent towards infrastructure support is not liable to payment of service tax - reliance can be placed in M/S SIR GANGA RAM HOSPITAL VERSUS COMMISSIONER OF SERVICE TAX, NEW DELHI 2020 (11) TMI 536 - CESTAT NEW DELHI and M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE ST INDORE, CCE ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD 2017 (12) TMI 509 - CESTAT NEW DELHI - thus, the issue is settled in favour of the assessee, therefore, demand on this count is not sustainable. Whether demand of cenvat credit is sustainable under Rule 6(3) on the ground that the appellant have not followed the procedure such as intimation to opt for Rule 6(3A) was not given? - HELD THAT - There is no dispute that the appellant have correctly paid the amount as required under Rule 6(3A) of Cenvat Credit Rules, 2004. The only lapse on the part of the appellant is that they have not given intimation to the department for opting of this option - merely for a procedural lapse when the amount was correctly paid under Rule 6(3A), no demand is sustainable - reliance can be placed in M/S. CRANES STRUCTURAL ENGINEERS VERSUS COMMISSIONER OF CENTRAL EXCISE 2016 (8) TMI 387 - CESTAT BANGALORE - it is settled that once the amount prescribed under Rule 6(3A) was paid by the appellant, no further demand is sustainable. Hence, the demand on this count is also not sustainable. As regard the issue raised on limitation, since the entire case has been decided on its merit, the aspect of limitation not taken up and the same is left open. The demand is not sustainable, hence, the impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
1. Liability of service tax on the amount retained by the appellant from doctor fees for infrastructure support.
2. Demand under Rule 6(3) of Cenvat Credit Rules due to non-compliance with Rule 6(3A) procedure.
3. Whether the demand is time-barred.

Summary:

Issue 1: Liability of Service Tax on Retained Doctor Fees
The Tribunal examined whether the appellant is liable to pay service tax on the amount retained from doctor fees for infrastructure support. Citing several judgments, including Sir Ganga Ram Hospital (2020) and others, it was established that the arrangement between hospitals and doctors for shared infrastructure does not constitute a taxable service. The Tribunal concluded that the retained amount is not liable to service tax as it is part of a joint benefit arrangement for providing healthcare services, which are exempt from service tax under various notifications and the negative list regime.

Issue 2: Demand under Rule 6(3) for Non-compliance with Rule 6(3A) Procedure
The Tribunal addressed whether the demand for Cenvat credit is sustainable under Rule 6(3) due to non-compliance with the procedure prescribed under Rule 6(3A). It was found that the appellant had correctly paid the amount required under Rule 6(3A) but failed to give intimation to the department. The Tribunal, referencing judgments such as Cranes & Structural Engineers (2017) and Emami Limited (2023), held that procedural lapses do not invalidate the substantive compliance of reversing the credit. Therefore, the demand on this count is not sustainable.

Issue 3: Time-barred Demand
Regarding the issue of whether the demand is time-barred, the appellant argued that there was no suppression of facts or mis-declaration. The Tribunal, while not delving deeply into this issue due to the decision on merits, noted that the demand is not sustainable based on the substantive compliance of Rule 6(3A).

Conclusion:
The Tribunal set aside the impugned order, concluding that the demand for service tax on retained doctor fees and the demand under Rule 6(3) for procedural non-compliance are not sustainable. The appeal was allowed.