2019 (1) TMI 378 - AT - Service Tax

Business Support service - appellant provides the basic infrastructure facilities and administrative support to the visiting doctors and specialist doctors - a part of the doctors visiting consultation fee is retained by the appellant in view of the consultant s making use of medical facilities, such as, radiology, pathology and all diagnostic available with the hospital and other administrative facilities - whether classified as Business Support services or otherwise? - Held that - The matter is no longer res-integra as this Tribunal in the case of M/s Sir Ganga Ram Hospital and others vs. CCE, Delhi I and others 2017 (12) TMI 509 - CESTAT NEW DELHI , where it was held that There is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Tax liability on health services provided by hospitals under the category of business support services.

Analysis:
The appellant, a chain of hospitals, provided health services and consultation by entering into agreements with doctors, retaining a part of the consultation fee for infrastructure and support services. The Revenue claimed the appellant provided infrastructural support services to doctors, subjecting them to tax liability. However, the Tribunal analyzed the agreements and found joint benefits with shared obligations, ruling out specific infrastructural support. The Revenue inferred the retained amount compensated infrastructural support, but the Tribunal disagreed, emphasizing the mutual arrangement for health care services, not business support services.

Under the negative list regime, health care services were exempt from service tax. The Tribunal examined the definitions of "clinical establishments" and "health care services," highlighting the exemption's scope. Despite the exemption, the Revenue sought to tax a part of the consideration received for health care services as business support services, which the Tribunal deemed untenable. The Tribunal concluded that taxing the hospital's share for supporting doctors' business would negate the exemption for health care services by clinical establishments.

Following a precedent where similar facts were considered, the Tribunal set aside the order-in-appeal, holding it lacked merit. The appeal was allowed, emphasizing the absence of taxable activity in the arrangement and the legal exemption for health care services provided by clinical establishments.