SERVICE TAX ON COSMETIC AND PLASTIC SURGERY SERVICES

[Dr. Sanjiv Agarwal]

Service tax has been imposed on cosmetic surgery and plastic surgery services by the Finance Act, 2009 with effect from 1st September, 2009 (Vide Notification No. 26/2009-ST dated 19.8.2009). The gross amount charged by any person to any other person in relation to cosmetic or plastic surgery is chargeable to service tax. 

Meaning of cosmetic surgery or plastic surgery

The phrases ‘cosmetic surgery or plastic surgery’ has not been defined in the Finance Act, 1994 (as amended by the Finance Act, 2009). Generally, such surgical procedures are undertaken to preserve on enhance physical appearance or beauty, the services which were hitherto excluded from beauty treatment services under section [65(105)(zq)]. 

Literally, ‘cosmetic’ implies involving or relating to treatment intended to restore or involve a person’s appearance, an act designed or serving to improve the appearance of the body, especially the face. It is an art of beautifying the body. It has its origin in 17th century from Greek where the word ‘kos metikos’ means arrange or adorn. The person who applies cosmetics is known as cosmetician. 

According to Cambridge Advanced Learner’s Dictionary, the term ‘cosmetic surgery’ has been defined as ‘any medical operation which is intended to improve a person’s appearance rather than their health’. 

According to Wikipedia, the term ‘surgery’ is defined as a medical technology consisting of a physical intervention on tissues. As a general rule, a procedure is considered surgical when it involves cutting of a patient’s tissues or closure of a previously sustained wounds.

According to the scope of taxable services only two types of surgeries are covered, i.e.-

•      Cosmetic Surgery

•      Plastic Surgery

but does not include medical surgery or cosmetic surgery which is performed for the purpose of medical treatment. 

Taxable Service

Section 65(105) (zzzzk) defines taxable service as under –

Any service provided or to be provided to any person by any other person, in relation to cosmetic surgery or plastic surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma. 

According to the aforesaid definition following tests should be satisfied to be a taxable service under section 65(105) (zzzzk) of Finance Act, 1994—

(a)   Taxable service shall be provided by any person to other person.

(b)   The services should be provided in relation to cosmetic surgery or plastic surgery. 

The service should be in relation to cosmetic surgery or plastic surgery and other forms of surgeries including medical surgeries and operations are not covered in taxable service. It’s not that only surgeries are taxable but services rendered in connection therewith are also taxable. These services could be performed by any person who may or may not be a qualified surgeon. For example, beautician can also perform such surgical procedures not involving medical procedures. 

Taxable service shall, however, exclude the following surgeries—

(a)   surgery undertaken to restore on reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma.

(b)   medical surgeries to cure any illness or disease or under medical exigency.

(c)   surgeries undertaken to correct any impairment in body.

(d)   Beauty treatment service and beauty parlour service as defined in section 65(17) and 65(105) (zq). 

Departmental Clarification

Ministry of Finance vide Letter No. DOF No 334/13/2009-TRU dated 6-7-2009 has clarified on this service as follows— 

Beauty treatment service provided by saloons, beauty parlors and beauticians are taxable since 2002. The service now proposed to be taxed is cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty. As per common definition, surgery is a medical technology consisting of a physical intervention on tissues. As a general rule, a procedure is considered surgical when it involves cutting of a patient’s tissues or closure of a previously sustained wound. Commonly surgery is performed in a sterile environment with anesthesia and antiseptic conditions using surgical instruments. It also includes ‘non-invasive’ surgery. 

Some of the commonly known aesthetic/cosmetic surgeries are abdominoplasty (tummy tuck); letharoplasty (eyelid surgery); mammoplasty; buttock augmentation and lift; rhinoplasty (reshaping of nose); otoplasty (ear surgery); Rhytidectomy (face lift); liposuction (removal of fat from the body); brow lift; cheek augmentation; facial implants; lip augmentation; forehead lift; cosmetic dental surgery; orthodontics; aesthetic dentistry; laser skin surfacing etc. 

However, any reconstructive surgery undertaken to restore one’s appearance, anatomy or bodily functions affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma would be outside the scope of this service. These processes could be undertaken to correct impairment caused by burns, fractures or congenital abnormalities like cleft lip etc. 

Reconstructive surgeries may be for feet care, wound care, micro surgeries etc. The non surgical treatments would cover laser treatment, botox injections, chemical peal, micro dermabrasion, sclerotherepy etc. The services of dermatologists or skin specialists such as facial hair removal, removal of warts, tags, moles, skin diseases etc. are also not considered as surgical procedures. 

In deciding the taxability, it should be kept in mind as to what is the purpose of surgery? If it is a medical requirement, no service tax is levied. If it has only a beautification or appearance value, service tax should be levied. The dominant intention should decide the taxability aspect of cosmetic or plastic surgery. 

The scope of services as per present trends is vast and includes –

-          Skin – Wrinkle removal, stretch mark removal, detanning, white patches, pimple / scars removal, laser glowing, black spot removal, skin polishing, pigmentation etc.

-          Cosmetic dentistry – zoom technology teeth whitening, implants, cosmetic braces, veneers, customized cosmetic fillings etc.

-          Abiminoplasty / liposuction – belly, hips, side ways protruding, outer thighs, inner thighs, arms, thigh lift, buttock lift etc.

-          Cosmeitc gynecology – eightening, hymen repair / reconstruction, labia surgery (labiaplasty) etc. 

Other examples or services could be breast reshaping, breast lift, breast reduction, liposuction, lip augmentation, face lift, male breast removal, hair transplantation, tummy tuck, facial rejuvenation, laser hair removal, permanent hair reduction, body shaping, facial implants, eyelid surgery, double chin fat removal, naval piercing etc. 

Value of Taxable Services 

        In case of cosmetic surgery undertaken and where patient is has to be hospitalized, entire hospital bill shall be liable to service tax. This may include professional fee to doctors, fee of anesthesiologist, pre operative care, clinical, operation and operation theatre charges, room charges and medicines etc. 

        In case the same fee is directly paid, say, to anesthesiologist, then in such cases, service tax may not be payable on such fees paid to him.

 

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