2022 (12) TMI 1297 - AT - Service Tax

Taxablity - services of healthcare or predominantly cosmetic in nature or not - Melasma - Birth Mark Treatment - Hypertrichosis Treatments - Hair Laser Comb Treatment - time limitation - HELD THAT - The appellant undertakes diagnosis, which is an art and act of diagnosing disease by symptoms and thereafter prescribing the necessary remedial treatment, diagnosis is not a simple guesswork. The appellant clinics employs qualified doctors who have completed post graduation in Dermatology. The appellant first undertakes a diagnosis of a new patient, which is done by the qualified Dermatologist for which they collect consultation charges. Pursuant to diagnosis, treatment is prescribed, the appellant clinic also prescribed the preventive measure and/or post treatment precaution. Preventive care means a measure taken to prevent disease from occurring or recurring rather than curing it. The appellant clinics are clinical establishment involved in Alopathy treatment, which is a recognised system of medicine in India. The appellant have been held to be clinical establishment by the Court below - the services provided by the appellant, save and except for hypertrihosis treatments and hair laser comb treatment fall under healthcare services and are accordingly exempt under Notification No. 25/2012-ST. Services rendered by the appellant assessee in respect of Hypertrichosis Treatments and Hair Laser Comb Treatment are held taxable under Cosmetic and Plastic Surgery service. Invocation of extended period of limitation - HELD THAT - The appellant had maintained proper records of the transaction and has taken registration under the provisions of Service Tax and were making regular compliances. Few returns were pending for which plausible explanation has been given being non-availability of the concerned staff. The appellant has regularly deposited their admitted taxes and have also paid tax and filed pending ST-3 returns during the course of investigation. The demand has been raised by the Revenue based on the accounts and records maintained by them. Accordingly, the extended period of limitation is not invocable. Levy of penalties - HELD THAT - As there is no suppression of facts with malafide intention to evade payment of service tax, penalty under Section 78 is set aside - the penalty of Rs. 10,000/- imposed under Section 77 of the Finance Act, 1994 for filing ST-3 late, is upheld. Appeal disposed off.

Summary

Issues Involved:
1. Taxability of various healthcare and cosmetic services.
2. Applicability of exemption under Notification No. 25/2012-ST.
3. Invocation of the extended period of limitation.
4. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994.

Issue-wise Detailed Analysis:

1. Taxability of Various Healthcare and Cosmetic Services:
The appellant operates a chain of healthcare services under 'Oliva Clinics' and provides treatments for various ailments and skin conditions. The Commissioner had confirmed the taxability of certain services such as Melasma treatment, Hypertrichosis treatment, Birth Mark treatment, and Hair Laser Comb treatment, while dropping the demand for other services like treatment of scars, viral warts, and Hirsutism. The Tribunal analyzed the nature of these services to determine whether they qualify as healthcare services or cosmetic treatments. It was concluded that services like Melasma and Birth Mark treatment fall under healthcare services and are exempt from service tax, while Hypertrichosis and Hair Laser Comb treatments are taxable as cosmetic services.

2. Applicability of Exemption under Notification No. 25/2012-ST:
The Tribunal referred to Notification No. 25/2012-ST, which exempts healthcare services provided by clinical establishments. The definition of healthcare services includes diagnosis, treatment, or care for illness, injury, deformity, or abnormality but excludes hair transplant or cosmetic surgery unless undertaken to restore or reconstruct anatomy or functions of the body. The Tribunal held that the appellant's services, except for Hypertrichosis and Hair Laser Comb treatments, qualify as healthcare services and are thus exempt from service tax.

3. Invocation of the Extended Period of Limitation:
The appellant argued against the invocation of the extended period of limitation, citing regular compliance with tax filings and plausible reasons for delays. The Tribunal found that the appellant maintained proper records, informed the Revenue about their services, and paid admitted taxes. Since the demand was based on records maintained by the appellant, the Tribunal concluded that the extended period of limitation is not applicable.

4. Imposition of Penalties under Sections 77 and 78 of the Finance Act, 1994:
The Tribunal reviewed the penalties imposed by the Commissioner. It upheld the penalty of Rs. 10,000 under Section 77 for late filing of ST-3 returns but set aside the penalty under Section 78, as there was no suppression of facts with the intent to evade tax.

Conclusion:
The Tribunal dismissed the Revenue's appeal and modified the impugned order as follows:
- Services like Melasma and Birth Mark treatment are exempt under healthcare services.
- Hypertrichosis and Hair Laser Comb treatments are taxable as cosmetic services.
- The extended period of limitation is not applicable.
- Penalty under Section 78 is set aside, while the penalty under Section 77 is upheld.
- The appellant is liable to pay service tax for Hypertrichosis and Hair Laser Comb treatments for the normal period with applicable interest.