2019 (9) TMI 395 - AT - Service Tax

Taxability - Health Services - appellants M/s Vivek Sewa Samiti received amount of approximately ₹ 1.5 crores M/s Gayatri Hospital received amount of approximately ₹ 82 lakhs from M/s ICICI Lombard General Insurance Company for providing health services to members of society who were below the poverty line under Rastriya Swastha Bima Yojana - period from 01.07.2010 to 30.04.2011 - HELD THAT - The requirement in the definition of said service is that the treatment is provided by service provider and payment is made by insurance company directly to the service provider then it satisfies the definition of health services provided under Section 65(105) (zzzzo) of Finance Act, 1994. The appellants during the relevant period had provided said services - demand of service tax upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Interpretation of Section 65(105)(zzzzo) of Finance Act, 1994 regarding taxable health services provided by hospitals to individuals covered by health insurance scheme.

Analysis:
The judgment involves a case where two hospitals, M/s Vivek Sewa Samiti and M/s Gayatri Hospital, provided health services covered under Section 65(105)(zzzzo) of the Finance Act, 1994. The hospitals received payments from an insurance company for providing health services to individuals under a government health insurance scheme. The issue revolved around whether service tax could be levied on the hospitals for providing these services. The proceedings resulted in the confirmation of demand for service tax and interest, with penalties imposed. However, the penalty under Section 78 was set aside in the impugned orders, leading to the hospitals filing appeals challenging the demand and interest.

The Tribunal considered the argument raised by the hospitals that since the health services were provided under a government scheme, service tax should not be applicable. The hospitals contended that the provision of health services was under the government scheme, making them exempt from service tax. However, the Revenue Department argued that as per the definition under Section 65(105)(zzzzo) of the Finance Act, 1994, the payment for services made directly to the hospital by the insurance company satisfied the definition of taxable health services. The Tribunal examined the definition and concluded that if the treatment was provided by the service provider and payment was made directly by the insurance company to the hospital, it would fulfill the criteria of health services under the said section. Therefore, the Tribunal held that the hospitals had indeed provided the specified health services during the relevant period, and there was no basis to interfere with the impugned orders confirming the demand for service tax and interest.

In light of the above discussions and analysis of the provisions, the appeals filed by the hospitals were rejected. The judgment reaffirmed that the hospitals were liable to pay service tax for the health services provided under the government health insurance scheme, as per the definition outlined in Section 65(105)(zzzzo) of the Finance Act, 1994.