2023 (5) TMI 521 - AT - Service Tax

Levy of service tax - business auxiliary service - renting of immovable property service - business support service to doctors by providing facilities and administrative support - period from April 01, 2013 to March 31, 2015 - HELD THAT - Paragraphs 5, 6, 9 and 11 of the first decision rendered by the Tribunal in M/S SIR GANGA RAM HOSPITAL, BOMBAY HOSPITAL MEDICAL RESEARCH CENTRE, APPOLLO HOSPITALS, M/S MAX HEALTH CARE INSTITUTE LTD VERSUS CCE DELHI-I, CCE ST INDORE, CCE ST RAIPUR, CST NEW DELHI AND CST DELHI VERSUS M/S INDRAPRASTHA MEDICAL CORPORATION LTD 2017 (12) TMI 509 - CESTAT NEW DELHI relate to the period before and after July 01, 2012. The Tribunal, after a consideration of the conditions prescribed in the agreement, held that the arrangement was for joint benefit of both the parties with shared obligations, responsibilities and benefits and, therefore, no service was provided by the hospital to the doctors. The Commissioner (Appeals) was justified in setting aside the order passed by the Additional Commissioner - Appeal of Revenue dismissed.

Summary

Issues Involved:
The issues involved in the judgment are the demand of service tax under "business auxiliary service" and "renting of immovable property service" with penalty and interest, related to a hospital's provision of services to doctors, and the applicability of service tax exemptions on health care services under the negative list regime.

Details of the Judgment:

Issue 1: Demand of service tax under "business auxiliary service" and "renting of immovable property service"
The department filed an appeal against the order passed by the Commissioner of Central Tax (Appeal-II) New Delhi, which set aside the order confirming the demand of service tax against a hospital. The hospital claimed to engage doctors for providing medical services to patients and raised bills for various services provided. Show cause notices were issued to the hospital alleging the provision of "business support service" to doctors. The Tribunal, in its decision, analyzed the agreements between the hospital and doctors, concluding that the arrangement was mutually beneficial with shared obligations and benefits, and no service was provided by the hospital to the doctors. The Tribunal emphasized that the retained amount by the hospital did not signify infrastructure support service to doctors, as it was part of a revenue-sharing model for health care services. The Tribunal also highlighted the exemption of health care services from service tax under the negative list regime, emphasizing that taxing such services would defeat the purpose of the exemption.

Issue 2: Applicability of service tax exemptions on health care services
The Tribunal referred to previous decisions and held that clinical establishments providing health care services are exempted from service tax under Notification No. 25/2012. It emphasized that taxing the share of clinical establishments for supporting doctors' business would negate the exemption provided to health care services. The Tribunal cited various cases where similar views were upheld, affirming that the Commissioner (Appeals) was justified in setting aside the order passed by the Additional Commissioner. Consequently, the appeal filed by the department was dismissed based on the consistent interpretation of the law in previous cases.

In conclusion, the Tribunal upheld the decision of the Commissioner (Appeals) in favor of the hospital, emphasizing the mutual benefit and shared responsibilities in the arrangement between the hospital and doctors, and the exemption of health care services from service tax under the negative list regime.