TMI Blog2018 (1) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... nt would fall under taxable category of health service, has to be given reconsideration - matter remanded to the adjudicating authority who will reconsider the issue whether the services are taxable or not. Extended period of Limitation - Held that: - As the main issue is remanded to the adjudicating authority, we leave this issue open with a direction to the adjudicating authority to decide the issue of limitation also in the denovo adjudication. Penalty - Held that: - the issue being an interpretational one, also since the services were taxable for a limited period and as there was considerable confusion as to whether the services rendered under a scheme floated by the Government would fall within the category of Health Services for levy of service tax, we find that the appellant has put forward reasonable cause for not discharging service tax on the entire value raised in the Bill. It is a fit case to invoke section 80 of the Finance Act - penalty set aside. Appeal allowed by way of remand. - ST/40758/2017 - Final Order No.43217/2017 - Dated:- 15-12-2017 - Ms. Sulekha Beevi C.S., Member ( Judicial ) And Shri Madhu Mohan Damodhar, Member ( Technical ) Shri Paul T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the appellants. The appellant was rendering both inpatient treatment as well as outpatient treatment. In the case of inpatient treatment, it involved professional charges, drugs used in the theatre, implant and equipment charges, medicines from the pharmacy etc. On drugs from pharmacy as well as used in theatre, the appellant discharged VAT. The appellant bonafidely believed that such amounts raised in the bill need not be included for discharging service tax liability. The insurance company, namely, M/s. Star Health and Allied Insurance Company vide letter dated 20.9.2010 had instructed the appellant to send the bills splitting up the components that go into the payment of service tax and non-taxable portion, so that they can reimburse such service tax. The appellants after taking legal opinion had raised the bill in such manner. They obtained opinion from their Chartered Accountant. The appellant had also obtained correct legal opinion from Shri K. Vaitheeswaran, their Advocate. The said Advocate had given legal opinion that the consideration received by the appellant from the insurance company is not subject to levy of service tax. The appellant raised a single bill clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the services provided by any hospital which is covered by any health service scheme, for any health check-up or treatment where the payment for such health check-up or treatment is made by the insurance company directly to such hospital or multi-specialty clinic would fall under the category of 'health services'. In the present case, Kalaignar Kapeetu Thittam is a Government scheme and does not fall within the category of an insurance company. The payment is made by the Government routed through the insurance company. Thus, there is no payment in effect directly from the insurance company. Further, the scheme having been propounded by the Government, services cannot be considered to be taxable service being a sovereign activity of the Government. He relied upon the decision of the Hon ble High Court of Madras in the case of M/s. Arvinth Hospitals Vs. Additional Commissioner of Central Excise - 2017 (48) STR 337 (Mad.). The ld. Consultant submitted that the Hon ble High Court had remanded the said matter to the original authority to consider whether the services would be taxable or not. 3.3 Thirdly, the Ld. consultant argued that in any case, the appellant has disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore the gross value on health care services would necessarily have to be included. That the demand of service tax on the entire value of bill raised is legal and proper. The claim of the appellant that VAT has been paid on the drugs / medicines cannot be entertained for the reason that the patients have come to the hospital only for medical treatment and not for purchase of drugs. In the bill raised by the hospital, there were various charges including professional charges, operation theatre charges, drugs, implant and equipment charges, charges for drug from pharmacy, x-ray charges, nursing charges etc. These charges are realized by the appellant for the treatment provided to the patient. The definition of health services uses the word payment received for treatment which is made by the insurance company directly to the hospital. Therefore, the appellant could not have excluded a part of the bill amount stating that such charges are not taxable services. The treatment is rendered as a whole and the expenses for drugs, professional charges etc. is part and parcel of the entire health services rendered to the patients. That the demand raised is legal and proper. The appellant fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviding the treatment under the said scheme. The foremost argument put forward on merits by the ld. consultant is that the treatment rendered under Kalaignar Kapeetu Thittam floated by the Government would not be covered by the definition of 'Health Services'. The said issue was agitated before the Hon ble jurisdictional High Court in the case of M/s. Arvinth Hospitals (supra) . The Hon ble High Court has observed as under:- 10. However, one fundamental error which has crept in the impugned proceedings is that the authority while adjudicating the show cause notice did not examine the scope of the transaction between the petitioner and the Government/STAR. In fact that should have been the first endeavour of the adjudicating authority, since the petitioner raised a preliminary objection by stating that KKT is a Welfare Scheme and not an Insurance policy, no approval was obtained from IRDA and therefore, they will not fall within the definition of Health Check-up and 'Treatment Services'. Thus, the primordial question would be whether while implementing the Welfare Scheme propounded by the State Government, if the work is entrusted to STAR would that by itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs. Consequently, connected Miscellaneous Petition is closed. 8. As seen from the judgment, the case of M/s. Arvinth Hospitals was remanded to the adjudicating authority to analylze the issue whether the services would fall under taxable category of health services. The facts presented in this case before us are identical and the submissions made are similar. We are of the view that the issue, whether the services rendered by the appellant would fall under taxable category of health service, has to be given reconsideration in line with the observations and directions of the Hon ble High Court rendered in the case of M/s. Arvinth Hospital.. We deem it fit to remand the matter to the adjudicating authority who will reconsider the issue whether the services are taxable or not. 9. The ld. consultant has also argued on the ground of limitation. As the main issue is remanded to the adjudicating authority, we leave this issue open with a direction to the adjudicating authority to decide the issue of limitation also in the denovo adjudication. However, we make it clear, that the issue being an interpretational one, also since the services were taxable for a limited period and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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