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Service tax on cosmetic surgery, Service Tax

Issue Id: - 117361
Dated: 18-7-2021
By:- Amresh kumar
Service tax on cosmetic surgery

  • Contents

Dear Sir,

Service tax was imposed on cosmetic surgery.

My query is

1. Is service tax payable merely on consultancy fees by the Doctor.

2. Plastic or cosmetic surgery is performed in the hospital and the Doctors are engaged on commercial basis. In my opinion the service tax is to be discharged by the Hospital and not by the Doctor.

3. The Doctors are paid by the hospitals deducting TDS under 26 AS. Now the department insists that doctor pay the service tax ad per 26 AS.

4. The department is also asking for contract or revenue sharing agreement. The same doctor is engaged by a number of hospitals.

Any circular/ guidelines in this regard please.


Amresh Kumar

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Showing Replies 1 to 6 of 6 Records

1 Dated: 19-7-2021

Sh. Amresh kumar Ji,

Query-wise reply is as follows :-

1. Service tax is payable on the gross amount charged i.e. whole amount of consideration (total payment). Go through the definition of 'consideration' under Section 67 of the Finance Act (below para no.4) which is extracted below:-

Explanation. - For the purposes of this section, -

(a) [“consideration” includes -

(i) any amount that is payable for the taxable services provided or to be provided;

(ii) any reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service, except in such circumstances, and subject to such conditions, as may be prescribed;

(iii) ------------------------------------------

(c) “gross amount charged” includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called “Suspense account” or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.]]

2. A doctor, being a professional, is liable to pay Service Tax in individual capacity notwithstanding working in the hospital, clinic. etc. (Service of employee is exempted.) For example ; other professional services are Chartered Accountant, CMA, Architects, Consulting Engineering Services, Service Tax Consultants, Company Secretary Service etc.A doctor is a professional person. In this scenario, doctor is not employee. Go through the literal/legal meaning of the word, 'professional' with the definition of 'service' under Section 65 B(44) of the Finance Act (effective from 1.7.12). After 1.7.12, the definition of service has been widened and includes all services provided by professional persons specialized in different fields.

Section 65 B(44) “service” means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include-

(a) an activity which constitutes merely,-

(i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or

(ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution, or

(iii) a transaction in money or actionable claim;

(b) a provision of service by an employee to the employer in the course of or in relation to his employment;

(c) fees taken in any Court or tribunal established under any law for the time being in force.

After 1.7.12, for the purpose of non-payment/non-applicability of Service Tax, service should specifically fall either in the exempted list or in the Negative List.

3. Yes. The department is right. TDS is your liability. So the taxable value includes the amount of TDS also. In case you have received any amount which is not reflected in 26AS by any reason, Service Tax will be applicable on that amount (consideration) inasmuch as ST is leviable on the gross amount charged.(Read with the definition of consideration extracted above.

4. When a doctor visits so many hospitals for providing consultancy or doing surgery, he/she enters into contract/agreement with all hospitals. The department intends to examine the terms and conditions of the agreement to ascertain the leviability/applicability or non-applicability of Service Tax. Pl. note that every kind of cosmetic surgery is NOT taxable. If any cosmetic surgery is performed as part of treatment that is not taxable.There are exemptions also in the category of Cosmetic Surgery'. That is why copy of contract/agreement is asked for by the department.

Revenue sharing is entirely an other different aspect. On this ground case laws are in your favour.

2 Dated: 19-7-2021

The question of revenue sharing does not arise in this case since the doctor only receives his fees and not any part of the income of the hospital.

3 Dated: 19-7-2021
By:- Amresh kumar

Dear Kasturi Sir,

When the surgery has been performed by the Dr in the Hospitals and Hospitals have made the payment to Dr after deducting TDS under 26AS in such cases the liability to pay service tax should be on the hospital and not the Dr as entire responsiblity of the patient is on the hospital.

Pl correct me if I am wrong.


4 Dated: 19-7-2021

Yes. You are correct.

5 Dated: 19-7-2021

Sh.Amresh Kumar Ji,

Here are two case laws regarding revenue-sharing. These are in support of the reply of Dr.Govindarajan, Sir.



6 Dated: 19-7-2021

Sh. Amresh kumar Ji,

Without perusing the contract/agreement executed between doctor and various hospitals, my reply will be incomplete. The department will also initiate the proceedings for recovery only after going through the copy of contract. There are so many factors to be examined for posting my detailed reply in response to your cross query. In a nutshell, Compare the definition of 'service' prior to 1.7.12 and after 1.7.12.

The whole issue revolves around the following factors :

(i) Who is the service provider ?

(ii) Who is de facto the service receiver ?

(iii) Why hospital has made payment to the doctor ?

Pl. reply to my above questions and, thereafter, I shall convince you on each and every point.


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