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M/s Sir Ganga Ram Hospital, Bombay Hospital & Medical Research Centre, Appollo Hospitals, M/s Max Health Care Institute Ltd Versus CCE Delhi-I, CCE&ST Indore, CCE&ST Raipur, CST New Delhi And CST Delhi Versus M/s Indraprastha Medical Corporation Ltd

2017 (12) TMI 509 - CESTAT NEW DELHI

Business Support Services - collection charges/facilitation fee - sharing of infrastructure with the doctors - Doctors are provided space in the hospitals with required facilities to attend to the patients coming to the hospitals, run by the appellants. These doctors engaged on contract basis are paid professional fee in terms of the contracts. - Held that:- there is no taxable activity identifiable in the present arrangement for tax liability of the appellant hospitals - After introduction of n .....

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legally sustainable - The service provided by the respondent hospital would merit classification under Health Care Services extended to the patients. Accordingly, the demand proceedings against the respondent hospital was dropped - Appeals are disposed-of. - ST/1844/2010, 51751/2014, 51815/2015, 50125/2014, 51764/2014, 50367/2016 & ST/51630/2016 - ST/A/58226-58232/2017-CU[DB] - Dated:- 6-12-2017 - S. K. Mohanty, Member (Judicial) And B. Ravichandran, Member (Technical) For the Appellant : S .....

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e engaged professionals and doctors on contractual basis. These doctors are provided space in the hospitals with required facilities to attend to the patients coming to the hospitals, run by the appellants. These doctors engaged on contract basis are paid professional fee in terms of the contracts. Fee paid to the doctors is computed based on a pre-determined ratio on the amount received by the appellants from the patients. The Revenue entertained a view that the collection charges/facilitation .....

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uded that appellants provided infrastructural support service to consultant doctors and, as such, are liable to pay service tax under the category of Business Support Services. They also imposed various penalties on the appellants. 2. Ld Advocate Shri B.R. Narsimhan, representing 5 of the appellants, contested the findings recorded by the original authority on various grounds. His submissions can be summarized as below: a) The amount booked under collection charges/facilitation fee of doctors is .....

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e services appointed various doctors in furtherance of their health care services. b) The agreements between the doctors and the appellants are mainly on revenue sharing basis. The collection charges are part of the amount collected by the appellants from the patients for providing health care services. The doctors are entitled to get a fixed percentage of total revenue earned by the appellants. If more work is carried-out by the doctor generating more income, the revenue accruing to the doctors .....

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g such health care services and are getting paid for the same. d) Health care services are exempt from service tax for the period post negative list 01.07.2012. Health care services were selectively taxed for the period 01.07.2010 to 01.05.2011 and thereafter by notification No.30/2011 ST dated 25.04.2011, health care services were exempt from service tax. Post negative list regime with effect from 01.07.2012, health care services rendered by clinical establishments were exempt by Notification N .....

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perations theaters, which are essentially for diagnosis and treatment of patients. These are typically health care services which are clearly exempt. e) The demand cannot be sustained for extended period as there is no element of fraud, willful mis-statements etc. The demand was raised by the Revenue based on examination of documents maintained by the appellant during the course of audit by the officers. Accordingly, the demand for extended period and imposition of penalties are not sustainable. .....

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not the individual doctors who are engaged to provide health care services by the appellant hospital. 3. The ld AR Shri Amresh Jain contested the appeals. He submitted that the doctors are engaged in the business activity and are earning consideration in their professional capacity. To perform their professional business, they have availed the support services of the appellant hospitals. The method of sharing revenue etc. cannot alter the nature of service provided by the appellant hospitals to .....

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by the appellant hospitals, are rightly subjected to service tax for providing support services. 4. We have heard both the sides and perused the appeal records. We have also perused specifically the terms of some of the agreements on record. The dispute in the present appeals is with reference to the tax liability of the appellant hospitals under the category of business support services. The statutory provision for the said tax entry is as below: Section 65 (104c) support services of business .....

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rvices and other transaction processing. Explanation. For the purposes of this clause, the expression infrastructural support services includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry 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 retaine .....

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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 obl .....

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hospitals out of total charges collected from the patients should be considered as an amount for providing the infrastructure like room and certain other secretarial facilities to the doctors to attend to their work in the appellants hospitals. We find this is only an inference and not coming out manifestly from the terms of the agreement. Here, it is very relevant to note that the appellant hospitals are engaged in providing health care services. This can be done by appointing the required prof .....

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pital till they leave the premises. ID cards are provided, records are maintained, all the supporting assistance are also provided when the patients are in the appellant hospital premises. The appellant hospital also manages the follow-up procedures and provide for further health service in the manner as required by the patients. As can be seen that the appellants hospitals are actually availing the professional services of the doctors for providing health care service. For this, they are paying .....

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pensate 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 .....

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etween a professional activity and an activity of a commercial character : …a profession … involves the idea of an occupation requiring either purely intellectual skill, or of manual skill controlled, as in painting and sculpture, of surgery, by the intellectual skill of the operator, as distinguished from an occupation which is substantially the production or sale or arrangements for the production or sale of commodities …a professional activity must be an activity carried .....

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er negative list regime w.e.f. 01.07.2012, the health care services are exempt from service tax. Earlier the health care services were only taxed for specified category of hospitals and for specified patients during the period 01.07.2010 to 01.05.2011. With effect from 01.05.2011, health care services were exempt from service tax under Notification No.30/2011 ST. After introduction of negative list tax regime, Notification No. 25/2011-ST exempted levy of service tax on health care services rende .....

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dicines 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. 10. The terms health care services is defined as below: health care services means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment bu .....

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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 clin .....

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