Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2024 (10) TMI AT This

  • Login
  • Cases Cited
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2024 (10) TMI 824 - AT - Service Tax


Issues Involved:

1. Whether the appellant is liable to pay service tax under the category of "Support Service of Business or Commerce" for providing infrastructure and other facilities to Diagnostic Service Providers (DSPs).
2. Whether the revenue-sharing model between the appellant and DSPs constitutes a service provision.
3. Applicability of extended period of limitation for service tax demand.
4. Legitimacy of interest and penalty imposed on the appellant.

Issue-wise Detailed Analysis:

1. Liability under "Support Service of Business or Commerce":

The core issue is whether the appellant's provision of infrastructure and facilities to DSPs qualifies as a "Support Service of Business or Commerce" under Section 65(104c) of the Finance Act, 1994. The appellant contended that the agreements with DSPs were based on a revenue-sharing model on a principal-to-principal basis, not constituting a service provision. The appellant provided basic amenities like space, water, and electricity, allowing DSPs to operate their equipment and provide diagnostic services. The Tribunal found that these arrangements did not constitute a taxable service under the "Support Service of Business or Commerce" category, as the appellant did not provide any service to DSPs but rather engaged in a revenue-sharing partnership.

2. Revenue-Sharing Model:

The appellant argued that the revenue-sharing arrangement with DSPs did not involve the provision of any service. The agreements stipulated shared revenue from diagnostic services provided by DSPs, with no service charges paid by DSPs to the appellant. The Tribunal agreed, noting that the contracts were purely for revenue sharing, with the appellant providing infrastructure and DSPs installing their equipment. The revenue was collected by the appellant, who then shared it with DSPs, indicating a principal-to-principal relationship rather than a service-provider relationship.

3. Extended Period of Limitation:

The appellant challenged the invocation of the extended period of limitation, arguing that there was no suppression of material facts. The Tribunal noted that the appellant's earnings from the revenue-sharing model were recorded in the balance sheets, which were public documents, and the department was aware of these facts. The Tribunal found that the appellant was under a bona fide belief that healthcare services were not liable to service tax, and the issue involved was interpretational. Therefore, the extended period of limitation was not applicable, rendering the substantial demand for the period 2008-09 to September 2011 time-barred.

4. Interest and Penalty:

Given that the demand for service tax was found unsustainable, the Tribunal held that the question of interest and penalty did not arise. The appellant's belief that healthcare services were exempt from service tax and the absence of any intent to evade tax supported the Tribunal's decision to set aside the penalties.

Conclusion:

The Tribunal concluded that the appellant was not liable to pay service tax under the "Support Service of Business or Commerce" category, as the arrangements with DSPs were on a principal-to-principal basis. The invocation of the extended period of limitation was unjustified, and the demand for interest and penalties was not warranted. Consequently, the appeal was allowed, and the impugned order was set aside, providing relief to the appellant.

 

 

 

 

Quick Updates:Latest Updates