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TMI Blog2019 (3) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... Kumar, Advocate for the respondent ORDER Both sides are in appeal against the impugned orders. 2. The assessee/respondent is in appeal against the impugned order wherein the demand of service tax along with interest was confirmed against the assessee by the adjudicating authority. The penalties were also imposed under Sections 76,77, and 78 of the Finance Act, 1994. Whereas the Revenue is in appeal against the order of dropping the proceedings against respondent M/s. Alchemist Hospital Limited. 3. As the facts are identical in these appeals, therefore, both the appeals are disposed by this common order. 4. The facts of the case are that the respondent- assessee are engaged in providing health services. An Audit was conducted and it was noticed that the respondent-assessee has entered into agreement with various doctors/consultants on revenue sharing basis whereby a part of the doctor s/consultants fee is retained by them in lieu of providing administrative support to them. Further, it was noticed that the respondent-assessee retained certain percentage of the consultant s fee charged from the patients as per agreement with different consultants on account of adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry and security. 5. The claim of the Revenue is that the appellants have provided infrastructural support service to various doctors. As a consideration for such support, they have retained a part of the amount collected from visiting patients. We have perused some of the agreements/appointment arrangements entered into between the appellant s hospitals and the individual doctors. Typically, the arrangement contains details like duration of time for consultation, the obligations on the part of the doctors, fee to be paid, procedure for termination of agreement, etc. The agreements generally talk about appointment of consultants to provide services to the patients who will visit or admitted in the appellants hospital. The doctors will receive a percentage of share of the collection from the patients in case of consultation, procedures and surgeries done by them. In some cases, there is a provision for treating patients from low economic background without any financial benefits. On careful consideration of various terms and conditions and the scope of arrangement, we are of the considered view that such arrangement are for joint benefit of both the parties with shared oblig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch arrangement. 7. The inference made by the Revenue that the retained amount by the hospital is to compensate the infrastructural support provided to the doctors can be examined in another angle also. Reading the statutory provisions for BSS, we note that the services mentioned therein are provided in relation to business or commerce. As such, to bring in a tax liability on the appellant hospital, it should be held that they are providing infrastructural support services in relation to business or commerce. That means, the doctors are in business or commerce and are provided with infrastructural support. This apparently is the view of the Revenue. We are not in agreement with such proposition. Doctors are engaged in medical profession. As examined by Hon ble Gujarat High Court in Dr KK Shah (supra), though in an income-tax case, we note that there is a discernable difference between business and profession . The Gujarat High Court referred to decision of Hon ble Supreme Court in Dr Devender Surtis AIR 1962 SC 63. The Supreme Court observed as below: There is a fundamental distinction between a professional activity and an activity of a commercial character : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nical establishment but does not include their transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of both affected due to congenial defects, developmental abnormalities, injury or trauma. 11. These two provisions available in Notification No.25/2012 will show that a clinical establishment providing health care services are exempted from service tax. The view of the Revenue that in spite of such exemption available to health care services, a part of the consideration received for such health care services from the patients shall be taxed as business support service/taxable service is not tenable. In effect this will defeat the exemption provided to the health care services by clinical establishments. Admittedly, the health care services are provided by the clinical establishments by engaging consultant doctors in terms of the arrangement as discussed above. For such services, amount is collected from the patients. The same is shared by the clinical establishment with the doctors. There is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or busi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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