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TMI Blog2024 (10) TMI 824X X X X Extracts X X X X X X X X Extracts X X X X ..... - there is absolutely no stipulation of payment of any service charges by the DSPs to the appellant and the contract is purely for sharing of revenue. Circular No. 109/03/2009-ST dated 23.02.2009 relied upon by the appellant also recognizes that the transactions between two contracted parties on principal-to-principal basis are not to be treated as service. Though the circular was issued in context of levy of service tax on movie theaters, but the context is applicable in the present case also, because in the present case, the appellant and the DSPs are dealing with each other on principal-to-principal basis. Mere providing of a building alongwith some basic amenities like electricity, water, sewage etc cannot be qualified as support service for running a business. These facilities are provided to the DSPs to enable them to provide the services to the appellant; and without these facilities, DSPs would not be in the position to provide the service to the appellant - Healthcare services are fully exempted from the tax w.e.f. 25.04.2011 vide Notification No. 30/2011-ST dated 25.04.2011. This notification was rescinded w.e.f. 01.07.2012, but healthcare services are not liable to servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed to install and operate their equipments in the appellant s premises. DSPs render services to patients within the hospital premises or outside the premises. The appellant and DSPs agree to share the revenue earned by way of rendering diagnostic and other services by DSPs to the patients, in an agreed percentage. DSPs and the appellant reconciled the amount of collections and the administrative charges. Thereafter, DSPs would raise monthly bills on the appellant for their share of revenue. The department initiated an investigation against the appellant alleging that the appellant was rendering Business Support Services (BSS) under Section 65(104c) read with Section 65(105)(zzzq) of the Finance Act, 1994 to DSPs in lieu of the consideration received in the form of revenue retained by the appellant. On these allegations, the department issued the show cause notice to the appellant proposing the demand of service tax amounting to Rs.82,20,316/- on the ground that the appellant provided BSS by providing infrastructural support services to DSPs. It was also alleged that the revenue retained by the appellant is against the BSS rendered by the appellant to DSPs. The department also i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es wherein it has been held that there is no provision of service in the revenue sharing arrangements: Mormugao Port Trust vs. CCE - 2017 (48) STR 69 (Tri. - Mum.) [Affirmed in 2018 (19) GSTL J118 (Supreme Court)] M/s Fazilka Coop Sugar Mills Ltd. vs. Commissioner of Central Excise, Chandigarh-II - 2024 (3) TMI 1231 - CESTAT Chandigarh M/s Sikri Multiplex Cinema (P) Ltd. vs. Commissioner of CGST, Ludhiana - 2024 (6) TMI 582 - CESTAT Chandigarh-LB SJS Healthcare Limited v. Commissioner of Central Excise Service Tax, Ludhiana - 2024 (4) TMI 300 - CESTAT Chandigarh Aashlok Nursing Home Pvt. Ltd. vs. Principal Commissioner of Central Excise Service Tax, Panchkula - 2024 (5) TMI 888 CESTAT New Delhi M/s Jaipur Golden Hospital vs. Commissioner, Service Tax-Delhi III, 2023 (3) TMI 693 - CESTAT New Delhi Apollo Hospitals International Limited vs. CCE ST -Ahmedabad-III - 2023 (12) TMI 953 - CESTAT Ahmedabad M/s Maharaja Agrasen Hospital Charitable Trust vs. CST Delhi-III - 2023 (1) TMI 391 - CESTAT New Delhi M/s Sir Ganga Ram Hospital vs. Commissioner of Service Tax, New Delh - 2020 (43) G. S. T. L. 390 (Tri. - Del.) M/s Sir Ganga Ram Hospital, Bombay Hospital Medical Research Centre, Appol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he office. Hence, these services are required to be provided within the office. She submits that in the instant case, the appellant has allowed DSPs to set up their equipments in its premises and provides basis amenities like security, intercom, housekeeping etc to DSPs in order to provide the diagnostic services to the patients coming to the hospital. The appellant directly charges the patients and share the revenue with DSPs in agreed ratios. Further, the basic amenities such as water, electricity, sewage, garbage disposal etc are part and parcel for inhabiting any premises. Therefore, these services cannot be construed as support services. In this regard, she relies on the following case-laws wherein in similar placed transactions, it has been held that service tax is not payable under BSS: CCE ST, Panchkula, Delhi-IV vs. Alchemist Hospital Limited, Artemis Medicare Services Limited (Vice-Versa) - 2019 (3) TMI 1331 - CESTAT Chandigarh M/s Fortis Healthcare (India) Limited vs. CCE ST, Chandigarh-I - 2019 (9) TMI 462 - CESTAT Chandigarh M/s Ivy Health Life Sciences Pvt. Ltd. vs. CCE, Chandigarh-II/Ludhiana - 2019 (4) TMI 178 - CESTAT Chandigarh M/s Gujarmal Modi Hospital Research ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries Ltd. and Commissioner of Central Excise and Service Tax vs. M/s Reliance Industries Ltd. - 2023-TIOL-94-SC-CX Mahanagar Telephone Nigam Ltd. vs. Union of India and Ors. - 2023-TIOL-407-HC-DEL-ST 4.13 As regards the demand of interest and penalty, the ld. Counsel submits that when the demand of service tax itself is not sustainable, then the question of interest and penalty does not arise. 5. On the other hand, the learned AR for the Revenue reiterates the findings of the impugned order. He has also filed the written submissions rebutting the appellant s arguments. He further submits that from the agreements and the definition of Support Service of Business or Commerce , it is clear that the appellant has provided infrastructural support, which is constituted as a support service under the category of Support Service of Business or Commerce . He further submits that as per the agreement, revenue sharing is done where the hospital retained a portion of fees collected from patients for services provided by the DSPs and this retention was deemed as consideration received indirectly for the infrastructural support provided. He also justifies the invocation of extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax on that. Further, perusal of the agreements between the parties clearly shows that the contracts between the appellant and various DSPs are on principal-to-principal basis and are in the nature of sharing-revenue. As per the contracts, the appellant is required to provide infrastructure and DSPs are required to install their equipments; and the revenue earned from the patients is shared between the appellant and the DSPs and no taxable service is being provided by the appellant to DSPs. Here, it is pertinent to extract the relevant clauses of such agreements with regard to sharing of revenue. The relevant clauses of one of the contracts with one of DSPs, Dr. Lal Pathlabs Pvt Ltd ( LPL ), is reproduced herein below: Revenue Sharing:- The Hospital and LPL will share the net revenue as below. Net Revenues for this purpose means all revenues earned out of pathology tests of the hospital subject to discounts, rebates etc. In respect of the work referred by the Hospital and are carried out at the lab in the hospital itself as per the attached Annexure C, LPL and the Hospital will share revenue in the proportion of 50:50. In respect of the work referred by the Hospital and are ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services are provided by the Hospital through the patients using the expertise and machinery of the DSPs. All reports of such diagnostic services are issued under the name of the Hospital. Further, the billing of such services is also done by the appellant s Hospital to the patients directly. Further, the entire revenue from the diagnostic centers is accounted for in the books of account as revenue of the appellant and the appellant pays for the services provided by the DSPs to the appellant after retaining its own percentage. It clearly shows that the service, if any, has been provided by DSPs to the appellant and not by the appellant to DSPs. 10. We also note that it is the appellant who established the Hospital and providing healthcare services to the patients and DSPs are, in fact, a part of the appellant as a joint venture who are providing diagnostic services to the patients; it is the patient, who is ultimate recipient and beneficiary of medical services in the appellant s Hospital. In fact, the Hospital provides the healthcare services to the patients and whenever any diagnostic service is required, the appellant and DSPs jointly provide the same to the patients. The revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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