The Delhi bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that Service tax under the head “business support services” is not allowable on health care services by the clinical establishment.
M/s. Maharaja Agrasen Hospital Charitable Trust, the appellant is running a hospital since the year 1988. It claims to have a facility of 410 beds, and doctors with specializations in different fields. According to the appellant, it engages doctors as consultants, resident doctors, senior resident doctors and doctors on an internship basis and whenever medical services are provided to a patient, the appellant raises a bill towards room charges, medicines, diagnostics charges for radiology and laboratories and doctor fees. The doctors so engaged are paid their share of fees.
The Commissioner also confirmed the demand for service tax under the head of “renting of immovable property” services and the confirmation of demand under the head of “business support service”. The Commissioner has found that the amount retained by the Hospital is towards the services rendered by the Hospital to the doctors for providing all the necessary facilities which are necessary and without which the doctors cannot perform their activities and therefore, the said service would be classifiable under section 65 (104) (c) as “support services of business and commerce” and taxable under section 65 (105) (zzzq) of the Finance Act 1994.
In the case of Ganga Ram Hospital, it was observed that such arrangements are for the joint benefit of both parties with shared obligations, responsibilities and benefits. The agreements do not specify the specific nature or list of facilities which can be categorized as infrastructural support to the doctors and held that there is no legal justification to tax the share of clinical establishment on the ground that they have supported the commerce or business of doctors by providing infrastructure.
Further observed that “Clinical establishment” means a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnosis or treatment of care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India, or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases.”
In view of the aforesaid decisions of the Tribunal, a Coram comprising of Justice Dilip Gupta, President and Mr P V Subba Rao, Member (Technical) set aside the impugned order and held that “the Commissioner was not justified in confirming the demand of service tax under the head “business support services”. “
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