TMI Blog2020 (11) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... ken to preserve or enhance physical appearance or beauty. Liposuction has been mentioned to a commonly known cosmetic surgery. Liposuction, however, is not bariatric surgery. The aim of liposuction is only to remove the excess fat of the body from specific target areas through suctioning so as to improve the shape and contour of the body, but the aim and object of bariatric surgery is to cure the state of morbid obesity and related disease. The discharge summary of the patients has been enclosed Annexure-5 to the appeal memo. The diagnosis and the summary of the case in all the discharge summary mentions morbid obesity with one or more life-taking disease of the nature referred to by the appellant. It is, therefore, not possible to conclude from the discharge summary that the patients undergoing bariatric surgery did not suffer from morbid obesity coupled with such diseases. Thus, when the Department itself accepted the findings of the Additional Commissioner in the aforesaid order dated February 22, 2016 that bariatric surgery is not cosmetic surgery or plastic surgery, it is not open to the Department to now contend that bariatric surgery is cosmetic surgery or plas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. However, a show cause notice dated October 4, 2013 was issued to the appellant requiring the appellant to explain why it did not pay service tax on the service provided through surgeries performed to cure obesity, which would be classifiable under cosmetic surgery or plastic surgery as defined in section 65(105)(zzzzk) of the Finance Act. It was alleged that surgeries were performed with the sole motive of weight reduction and had no relation with reconstruction or restoring anatomy or function of body affected due to congenital defects, development abnormalities, degenerative diseases, injury or trauma. Thereafter, two periodical show cause notices dated September 11, 2014 and July 5, 2016 were also issued to the appellant proposing demand of service tax with interest and penalty. The appellant filed detailed replies to the aforementioned show cause notices. 4. The Commissioner/Principal Commissioner, however, confirmed the demands proposed in the three show cause notices with interest and penalties under section 65 (105)(zzzzk) of the Finance Act. This section is reproduced below : Section 65 (105) (zzzzk): taxable service means any service provided or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rementioned diseases the person is afflicted with. The BMI is nothing but only a scale to decide the degree of a person obesity. All these facts clearly establish that bariatric surgery is related to weight reduction by making a surgery and not a treatment of degenerative disease like diabetes, cancer, heart disease, arthritis etc. (emphasis supplied) 6. Thereafter, the Commissioner analyzed the meaning of the terms congenital defects, developmental abnormalities, degenerative diseases, injury or trauma. This was for the reason that surgeries undertaken to restore or reconstruct anatomy or functions of body affected due to these are not taxable under section 65(105)(zzzzk) of the Finance Act. The relevant observations are as follows : The Government while bringing the Cosmetic or Plastic Surgery Services under Service Tax net has taken utmost precautions and therefore while defining the taxable service has kept taxation on surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative disease, injury or trauma out of purview of taxation. At this juncture before get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r para 2.4.3 has made a mistake of not giving any credence to 2.4.2 of the same leter which reads as under:- 2.4.2 Some of the commonly known aesthetic/cosmetic surgeries are abdomenoplasty, (tummy tuck); blepharoplasty (eyelid surgery0; mammoplasty; buttock augmentation and lift; rhinoplasty (reshaping of nose); otoplasty (ear surgery); Rhytidectomy (facelift); liposuction (removal of fat from the body) brow lift; cheek augmentation; facial implants; lip augmentation; forehead lift; cosmetic dental surgery; orthodontics; aesthetic dentistry; laser skin surfacing etc. This para of the same circular specifically mentions liposuction as a cosmetic surgery. The liposuction is nothing but a surgery with the sole purpose of removal of fat from body or in other words resulting in weight loss or reductions of morbid obesity. The same is the case with that of bariatric surgery here in carried out by the Noticee in their premises which is also with a sole purpose of weight loss or reduction of morbid obesity. Thus, when the sole purpose of both the surgeries is nothing but weight loss or reduction of morbid obesity and one i.e. namely liposuction has already got a place un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the appellant assisted by Shri N. Singhvi, made the following submissions: (i) The activities carried out by the appellant for the period from November 1, 2011 to June 30, 2012 are not taxable under section 66 of the Finance Act. The adjudicating authority has confirmed the demand of service tax by classifying the activities of the appellant under section 65(105)(zzzzk) of the Finance Act but the scope of this provision was clarified by Circular dated July 6, 2009 to provide that the cosmetic and plastic surgeries intended towards preservation or enhancement of physical appearance or beauty alone are covered within the scope of said section. The appellant has not carried out any cosmetic or plastic surgery. In any case, the surgeries carried out by the appellant are specifically excluded from the definition of the aforesaid taxable service; (ii) For the period July 1, 2012 onwards, the appellant is exempted from payment of service tax on the subject activities. The show cause notice relies on the provisions applicable for the period prior to July 1, 2012 for proposing the demand for the period July 1, 2012 onwards and no allegations have been made in the show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Morbid has been defined in Oxford English Reference Dictionary (Indian Edition) as of the nature of or indicative of disease . It has been defined in Webster s Third New International Dictionary as relating to, or characteristic or disease. Obesity has been defined in the Webster s Third New International Dictionary to mean a bodily condition marked by excessive generalized deposition and storage of fat . Thus, morbid obesity would be a disease relating to a bodily condition marked by generalized deposition and storage of fat. 13. The period in the show cause notices is from November, 2011 upto March, 2015. Thus, the period before and after July 1, 2012 is covered by the three show cause notices. 14. For the period from November 1, 2011 upto June 30, 2012, the Commissioner has confirmed the demand of service tax by classifying the activities of the appellant under section 65 (105)(zzzzk) of the Finance Act. For the period subsequent to June 30, 2012, the show cause notices relies on the same provision. The appellant, however, claims that it does not perform any cosmetic or plastic surgery and that it is exempted from service tax for the period commencing July 1, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that bariatric surgery is singularly for weight loss, irrespective of its association with any disease. (iv) Obesity cannot be termed as developmental abnormalities, as developmental abnormalities are manifest at the natal stage of human being. (v) Liposuction has been termed as cosmetic surgery from July 6, 2009. Thus, bariatric surgery comes under the purview of cosmetic surgery. (vi) Reliance placed by the appellant on Central Government Health Scheme is misplaced as it is under a different statute. 18. A bare perusal of section 65(105)(zzzzk) of the Finance Act indicates that it is divided into two parts, namely, the means part and the exclusion part . Under the means part , taxable service would mean any service provided or to be provided to any person, by any other person, in relation to cosmetic surgery or plastic surgery. The exclusion part excludes any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormality, degenerative disease, injury or trauma. 19. The first issue that would arise for consideration is whether the surgery undertaken by the appellant is in relation to cosm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idation of biologic markers, factors regulating the regional distribution of fat, studies or energy regulation, and studies utilizing the techniques of anthropology, psychiatry, and the social sciences. (emphasis supplied) 24. It has also been submitted that bariatric surgery, which may also be referred to as metabolic surgery, is a surgery performed on the stomach and/or intestines with the intent of resolution of metabolic syndrome i.e. Obesity, Type-II diabetes mellitus (DM), hypertension or dyslipidemia. The number of ways in which this surgery is performed can be summarized in the following manner: (i) Adjustable Gastric Banding- Involves placing a silastic belt around the upper part of stomach which separates the stomach into two parts. Due to surgery, the patients feel belt with smaller amount of food. It is a slow and steady way of excess weight loss. (ii) Sleev Gastrectomy About 75 percent of the stomach is removed, leaving a narrow gastric tube or sleeve . No intestines are removed or bypassed\It offers a shorter operative time and is advantageous for patients with severe heart and lung diseases. It works by reducing the size of the stomach, not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionary of Medicine A field of medicine encompassing the study of overweight, its cause, prevention, and treatment. Surgery concerned with the restoration, reconstruction, correction, or improvement in the shape and appearance of body structure that are defective, damaged, or misshapened by injury, disease, or anomalous growth and development. 3. Butterworth s Dictionary (1978) That branch of surgery which deals with the reconstruction, or with the correction, of deformities of soft tissues That branch of plastics surgery which deals mainly with attempt to improve the appearance especially of face, hands and breast. 27. Thus, according to the appellant bariatric surgery is aimed at providing a permanent solution to obesity which causes various life taking diseases, unlike other weight loss methods/ procedures/ surgeries which merely aim at body contouring causing changes in physical appearance more than any health benefits. The appellant has also pointed out that the aim of liposuction is only to remove th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of food at one time. When the stomach contents move to the duodenum (the first part of the small intestine), bile and pancreatic juice speed up digestion. Most of the iron and calcium in the food is absorbed there. The other two parts of the nearly 20 feet small intestine absorb nearly all of the remaining calories and nutrients. The food particles that cannot be digested in the small intestine reside in the large intestine until eliminated. The body needs a certain amount of energy (calories) from food to keep up basic life functions. Body weight tends to remain the same, when the number of calories eaten equals the number of calories the body uses/burns. Over the time, when the calories consumed are more than the calories that could be burnt, such unused calories convert into fat, tipping towards weight gain, overweight, and obesity. Overweight and obesity lead to various diseases such as Type-II diabetes, heart disease, high blood pressure, nonalcoholic fatty liver disease, osteoarthritis and some types of cancer. (iv) When the root cause of disease is taken care of, the disease will automatically be treated. It is with this purpose that the appellant undertakes bariatr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.3. However, any reconstructive surgery undertaken to restore one s appearance, anatomy or bodily functions affected due to congenital defects, developmental abnormalities, degenerative disease, injury or trauma would be outside the scope of this service. These processes could be undertaken to correct impairment caused by burns, fractures or congenital abnormalities like cleft lip etc. (emphasis supplied) 31. A bare perusal of the aforesaid Circular shows that the services proposed to be taxed in the 2009-10 budget are cosmetic surgery and plastic surgery undertaken to preserve or enhance physical appearance or beauty. Out of the commonly known cosmetic surgery, reference has also been made to liposuction. The Circular also specifically mentions that any reconstructive surgery undertaken to restore one s appearance, anatomy or bodily functions affected due to congenital defects, developmental abnormalities, degenerative disease, injury or trauma would be outside the scope of this service. 32. It will also be pertinent to refer to the minutes of the meeting of the Postgraduate Medical Education Committee held on July 25, 2014 in regard to the guidance issued f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascular diseases. The Suggestion that Obesity is not a diseases but rather a consequence of a Chosen lifestyle exemplified by overeating and / or inactivity is equivalent to suggesting that Lung Cancer is not a disease because it was brought about by individual choice to smoke cigarettes , the resolution said. The cosmetic surgery is done to improve the looks of a person, but bariatric surgery is done to correct the metabolic and hormonal state of the diseased body along with weight loss. May 6,2014 President-IMA, Indore, Br. Dr. Surendra Bapat M.B.M.S. FAIS, FIAGES, MAMASI, MACRSI MBA (HA), LLB (HONOURS), MA (SOCIOLOGY) B.J.D.Y.E. (emphasis supplied) 34. It is evident from the aforesaid that bariatric surgery is distinct from the plastic or cosmetic surgery. Bariatric surgery is a procedure through which the intake capacity of the patient is restricted, thereby resulting in weight loss which is necessary for control of obesity related diseases, while plastic or cosmetic surgery is intended to improve the outer shape and appearance of the body. Bariatric surgery is undertaken only on those patients who are diagnosed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant is not performing plastic surgery or cosmetic surgery and, therefore, the surgery would not fall in the main part of the definition of taxable service under section 65(105)(zzzzk) of the Finance Act. 39. The factual position pointed out by the appellant has also been noted with approval by the Additional Commissioner in an order dated February 22, 2016 by which the proceedings initiated by the show cause notice dated August 11, 2015 issued to M/s. Asian Bariatrics, Rajkot were dropped. The show cause notice proposed to tax the bariatric surgery performed by M/s. Asian Bariatric under section 65 (105)(zzzzk) of the Finance Act. The Additional Commissioner noticed that the issue that was required to be decided was whether bariatric surgery was taxable under the aforesaid section of the Finance Act. After referring to the Circular dated July 6, 2009, the Exemption Notification dated June 30, 2012, the literature provided by the appellant therein relating to bariatrics, the letter of the Medical Council of India, the Additional Commissioner found as a fact that bariatric surgery cannot be considered as cosmetic or plastic surgery and was, therefore, not taxable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r para-medics and hence the same are exempted under Notification No. 25/2012-ST dated 30-06-2012. I find that the definition of health care service , as prescribed under para 2(t) of the Notification No. 25/2012-ST dated 30-06-2012 reads as under: 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, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; 4.7 I find that the Noticee in support of their above explanation of Bariatric Surgery submitted various nationally and internationally acclaimed study reports and research materials . On perusal of these reports and research materials, I find in guidelines for Bariatrics (Metabolic) Surgery for Indian Population (Section 25 Surgery, Chapter 172, published by P. Praveen Raj, C Palanivelu, Author for Medical Books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jkot and also vide letter dated 12-02-2016, have provided details of the surgeries performed by them, which include date of surgery, name of the patient type of surgery and amount received by them. On scrutiny of this information I find that the Noticee has performed Bariatric Surgery during the period from March-2014 to March-2015. Since the Noticee has performed Bariatric Surgery and since Bariatric Surgery does not cover under the definition of Cosmetic or Plastic Surgery, as defined under Section 65(105)(zzzzk), as discussed in length in preceding paras, I hold that the Noticee is not liable to pay Service Tax amounting to ₹ 21,72,888/- demanded from them vide Show Cause Notice No. V.ST/AR-1-RJT/43/ADC(BKS)/2015 dated 11-08-2015, in respect of Bariatric Surgeries performed during the period from March 2014 to March 2015, as the same is not a taxable service, as the same is not legally sustainable and therefore, liable to be dropped and consequently the proposal for recovery of interest and imposition of penalties on the Noticee. (emphasis supplied) 40. The aforesaid order of the Additional Commissioner was accepted by the Department, which fact is clear fro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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