The Chandigarh Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that revenue sharing arrangements between the health care service provider (Fortis Healthcare) and the diagnostic services providers are not subject to service tax. As the issue involved in the present case was related to the interpretation of a statutory provision, the extended period cannot be invoked, as the issue was pan-India.
The only issue involved in the present case is whether the appellant is liable to pay service tax under the category of ‘Support Service of Business or Commerce’ as defined under Section 65(104c) read with Section 65(105)(zzzq) of the Finance Act, 1994, to the DSPs by providing them infrastructure, equipment, facilities and administrative support.
The Division Bench comprising S S Garg (Member Judicial) and P Anjani Kumar (Member Technical) observed from a perusal of the agreements between the parties that the contracts between the appellant and various DSPs are on a principal-to-principal basis and are in the nature of sharing-revenue.
As per the contracts, the Bench found that the appellant is required to provide infrastructure and DSPs are required to install their equipment; and the revenue earned from the patients is shared between the appellant and the DSPs, and no taxable service is being provided by the appellant to DSPs.
Therefore, the Bench referred to the decision of the Tribunal in the case of OP Jindal Institute of Cancer & Research [Final Order No. 60579/2024 dated October 16, 2024], which has considered the identical issue along with the agreements entered into by the Appellant with the diagnostic services providers (DSPs), and quashed the service tax demand.
Briefly, the appellants are engaged in the provision of Health Care Services to their patients, which are either non-taxable or exempt from service tax. They had availed certain specialised services such as Radio Diagnosis, MRT, CT scan, Dental Care, etc., from specialised service providers (DSPs) within the hospital premises on payment of agreed/fixed consideration/revenue.
The department entertained the view that the appellant was providing ‘Support Services of Business or Commerce’ to the DSPs and, therefore, the appellants are liable to pay service tax under the said category. Accordingly, SCN was issued, and the demand was confirmed. The appellant submitted that they are the receiver of services provided by the vendors; therefore, the finding of the Commissioner that the appellant is providing services to the vendors and is charging them is factually incorrect and perverse.
Appearances:
Advocate Yuvraj Singh, for the Appellant/ Taxpayer
ARs Anurag Kumar and Goverdhan Dass Bansal, for the Respondent/ Revenue
