The Central Board of Indirect Tax and Customs (CBIC) today clarified that Service Tax cannot be levied on Ambulance Services provided to the Government by the private service providers under the National Health Mission (NHM).
Under the National Health Mission(NHM), a flagship programme of the Government of India, the Central Government provides technical and financial support to states to strengthen healthcare systems including for free ambulance services.
Many states are operating the ambulance service on an outsourced model and these services are funded under the NI-IM and provided free of cost to all patients. In this connection the Ministry of Health & Family Welfare, has requested for a clarification whether the private service provider (PSP) is liable for payment of service tax.
The Board noted that the entire project involves three legs of activities, one by the Government for the public, second by the PSP for the public and third, by the PSP for the Government. In respect of the first and the second legs of activity i.e. the ambulance services being provided by the Government and PSP to the patients, neither the State government nor the PSP charges any fee from the patients who avail of these ambulance services. The PSP however charges a fee from the State government for carrying out the third activity.
As per Section 65(44) B of the Finance Act, 1994, any activity carried out by one person for another without any consideration will not be covered by the definition of ‘service’.
It was therefore clarified that “Even if a consideration was charged, by virtue of entry 2(ii) of notification no 25/2012- Service Tax dated 20th June, 2012, services provided by way of transportation of a patient in an ambulance, other than health care services by a clinical establishment, an authorized medical practitioner or paramedics, are exempted from the whole of the service tax leviable thereon. Thus the activities provided by the State government and the PSP to patients are not leviable to service tax.”