Custom, Excise & Service Tax Tribunal
Trichoderm vs Principal Commissioner, Central ... on 30 January, 2026
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO.III
Service Tax Appeal No.50829 of 2021 with Service Tax
Miscellaneous Application No.50658 of 2024
[Arising out of Order-in-Original No.61/TPS/PC/CGST/DSC/2020-21 dated
28.01.2021 passed by Principal Commissioner of CGST, Delhi South
Commissionerate, New Delhi]
M/s. Trichoderm Appellant
A-1, 304, Safdarjung Enclave,
New Delhi-110 029.
VERSUS
Principal Commissioner, Central Excise, Respondent
Service Tax and Central Tax Commissionerate, Delhi South, 3rd Floor, Plot No.2B, EIL Annexe Building, Bhikaji Cama Place, New Delhi-110 066.
APPEARANCE:
Shri A.K. Batra and Ms. Sakshi Khanna, Chartered Accountants for the appellant.
Shri S.K. Meena, Authorised Representative for the respondent.
CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. RAJEEV TANDON, MEMBER (TECHNICAL) FINAL ORDER NO.50182 /2026 DATE OF HEARING:12.11.2025 DATE OF DECISION:30.01.2026 BINU TAMTA:
1. The appellant is registered with the Service Tax Department for rendering taxable services of 'Cosmetic and Plastic Surgery Services'.
The appellant operates clinical establishment under brandname, 'Medlinks', providing dermatological and trichological healthcare services such as Acne Treatment, Alopecia Treatment, Atopic Dermatitis, Burn Scare Treatment, Cyst Removal, Hair Transplant, 2 Hair Treatment, Hypemelanosis Treatment, Moles Removal, Morphea Treatment, Multiple Cyst Removal, Nail Treatment, Obesity Treatment, Scar Removal, Scarring Alopecia Treatment, Tricort Injection, Wart Removal, Vitiligo Treatment (treatment of white patches on skin), Skin Resurfacing for wounds and other dermato- surgical procedures.
2. The appellant is offering services for beautification or for enhancement of looks, where patients do not have any disease, which is developed because of any injury, accident etc. for rendering services purely for aesthetic purposes, the appellant has discharged the service tax liability. In respect of other services, the appellant availed exemption in terms of Entry No.2 of Notification No.25/2012-ST dated June 20, 2012 as they qualify as 'Health Care Services' within the meaning of paragraph 2(t) of the said notification.
3. During the search proceedings, it was found that the appellant is maintaining their data in two formats, first in the form of Kachcha register and second in their software in soft copy. The name of the software is 'zenoti', which is owned by M/s. Urenok Software, who refused to provide the details as the appellant had not permitted them to do so. In the absence of such details, the Department had taken the readily available data for assessment under Section 72 of the Act. The liability towards service tax was calculated for the year FY 2016- 17 on the basis of revenue of FY 2015-16 and 2016-17 upto September 4, 2016 and liability of service tax for the period, April, 3 2017 to June, 2017 was calculated from balance sheet of the appellant. Accordingly, show cause notice dated November 8, 2019 was issued proposing demand of service tax of Rs.2,61,94,416/- along with interest and penalty. On adjudication, the Principal Commissioner by the impugned order 1 confirmed the demand of Rs.2,62,91,823/- along with equivalent amount of penalty under Section 78 and Rs.10,000/- under Section 77 of the Act. Being aggrieved, the present appeal has been filed.
4. We have heard Shri A.K Batra, Chartered Accountant for the appellant and Shri S.K. Meena, Authorised Representative for the Revenue.
5. At the outset, Shri Batra, learned counsel submitted that the demand in the present case pertains to post-negative period, however, the demand has been raised invoking the pre-negative classification of services and therefore, the same is not maintainable. Referring to the various services, he submitted that they are in the nature of healthcare service and therefore, eligible to avail the benefit of exemption as provided under Entry No.2 of the Mega Exemption Notification. He also challenged the application of the best judgement assessment by the Department and also taking note of the appointments mentioned in the Kaccha register instead of the actual figures shown in the balancesheet. The demand of Rs.97,407/- confirmed in the impugned order is beyond the scope of SCN. According to him, the appellant is entitled to avail cum-tax benefit in Order-in-Original No. 61/TPS/PC/CGST/DSC/2020-21 dated 28.01.2021 1 4 terms of Section 67(2) of the Act. The argument is that for the calculation of the demand for the period 2015-16 and 2016-17, the Department has applied highest rate of Service Tax Act instead of applying the correct rates prevalent during the said period. He also challenged the invocation of extended period of limitation as there is no suppression, mis-statement, or mis-declaration of facts by the appellant as the unit is registered and all the information was available with the Department.
6. Shri S.K. Meena, the learned Authorised Representative for the Department has pointed out that SCN contains the provisions of post- negative period also and therefore, there is no error in the application of the provisions of law. He also emphasised that the exemption as claimed is allowed only in the event of providing healthcare services by authorised medical practitioner through any clinical establishment. But in the instant case, the services provided by the appellant are not covered under the healthcare services rather the services are related to preserving and enhancing of skin, hair, scalp for enhancing the physical appearance and improving the look of the person, which is more appropriately covered under 'cosmetic and plastic surgery services' and, therefore, liable to payment of service tax. The application of Section 72 was justified due to absence of the detail/break-up of the data and, therefore, the Department was justified in calculating the demand as per the highest rate of service tax. The learned Authorised Representative for the Department supported the finding that the appellant is not eligible for cum-tax benefit as the appellant had not received any such amount of service 5 tax from their clients. On the invocation of the extended period of limitation, it was submitted that the appellant is working under self- assessment system and being aware of the provisions of service tax and the nature of services, they intentionally suppressed the fact that their procedures are not cosmetic in nature so as to avail the exemption notification.
7. From the records of the case, it appears that the appellant is rendering both cosmetic and plastic surgery and healthcare services, however, we need to examine whether the services in question can be classified as cosmetic and plastic surgery and, therefore, liable to service tax or the same falls within the definition of healthcare services and therefore, is entitled to claim the benefit of the exemption notification. To proceed further, it is necessary to appreciate the provisions of law in this regard. Section 65(105)(zzzzk) defines the 'taxable service' in relation to cosmetic or plastic surgery as under:-
"Taxable Service" means any service provided or to be provided to any person, by any other person, in relation to cosmetic surgery or plastic surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative disease, injury or trauma."
8. Under the post-negative era w.e.f July 1, 2012, Section 65B(44), defines the term 'service' as any activity carried out by a person for another for consideration and includes a declared service subject to exceptions provided therein. The Mega Exemption Notification No.25/2012 at Entry 2 provides for healthcare services 6 and the clauses thereunder defines the term 'authorized medical practitioner', 'clinical establishment' and 'healthcare service' which are as under:-
Entry 2 : Health care services by a clinical establishment, an authorized medical practitioner or paramedics;
2(d) "authorised medical practitioner" means a medical practitioner registered with any of the councils of the recognized system of medicines established or recognized by law in India and includes a medical professional having the requisite qualification to practice in any recognized system of medicines in India as per any law for the time being in force;
2(j) "clinical establishment" means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines 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;
"2(t) "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."
9. In terms of the aforesaid provisions, the prerequisite conditions to be satisfied are that the services should be provided by clinical establishment, the service provider should be an authorised medical practitioner or paramedics and the services should be in the nature of healthcare service as defined. There is no doubt that the appellant is a 'clinical establishment' as it provides services or facilities requiring diagnosis, treatment/care for illness, injury, deformity and abnormality. Secondly, the appellant is an 'authorised medical 7 practitioner' and the treatments are administered by doctors, who are registered with the Medical Council of India.
10. The scope of taxable services includes cosmetic surgery and plastic surgery, but does not include medical surgery or cosmetic surgery, which is performed for the purpose of medical treatment, i.e.;
"a). Surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative, diseases, injury, or trauma.
b). Medical surgeries to cure any illness or disease or under medical exigency.
c). Surgeries undertaken to correct any impairment in body."
11. To consider the nature of services provided by the appellant, we may take note of the list of services rendered:-
LIST OF SERVICES Acne Treatment Alopecia Correction Alopecia Surgery Alopecia Treatment Atopic Dermatitis Burn Scar Treatment Cicatricial Alopecia Correction Cyst Removal Facial Asymmetry Treatment Folliculitis Inversa Treatment Hair Transplant Hidraadenitis Treatment Hirsutism Treatment Hypermelanosis Treatment Intragen Treatment Laser Surgery Lipodystrophy Treatment Medical Consultation Medical Consumables Medical Injectable Treatment Medical Laser Treatment 8 Medical procedure Medical Surgery MEDICAL TREATMENT Milia Treatment Morphea Treatment Multiple Cyst Removal Nail Surgery Scar Removal Scarring Alopecia Reduction Scarring Alopecia Surgery Scarring Alopecia Treatment Tricort Injection Vitiligo Surgery Wart Removal
12. The submission of the learned Chartered Accountant for the appellant is that the services rendered by them have already been considered by the Tribunal as 'healthcare services' in the following decisions:-
(1) Mohak Hi Tech Specialty Hospital Vs. Principal Commissioner of Central Excise, Customs & Service Tax, Indore (M.P.)2 (2) Sreyas Holistic Remedies Pvt.Ltd. Vs. CCT & Central Excise, Hyderabad (Vice Versa)3 (3) Livelife Hospitals Pvt. Ltd. Vs.CST, Hyderabad-GST4 (4) Mohak Hi Tech Specialty Hospital Vs. Commissioner of Central Excise & CGST, Indore5 (5) Commissioner of Central Tax Goods and Service Tax, Delhi East Vs. Sanjay Electricals (Vice Versa)6 (6) Berkowits Hair & Skin Clinic Vs. Principal Commissioner of GST & Central Excise, Delhi South7
13. In Mohak Hi Tech Speciality Hospital, the Tribunal dealt with the period involving both pre-negative and post-negative and therefore, considered the cosmetic surgery or plastic surgery as taxable under Section 65(105)(zzzzk) and also the definition of health care services under the Mega Exemption Notification, with reference 2 2020 (11)TMI 152 -CESTAT -New Delhi dated 3.11.2020 3 2022 (12) TMI 1297-CESTAT-Hyderabad dated 23.12.2022 4 2023 (4) TMI 923 -CESTAT-Hyderabad dated 18.04.2023 5 2025(6) TMI 8 -CESTAT-New Delhi dated 23.05.2025 6 2024 (1) TMI 891 -CESTAT-New Delhi dated 18.01.2024 7 2023 (11) Centax 56 (Tri.-Del)/2023(386) ELT 745 (Tri.-Del.) 9 to bariatric surgery. The Bench also distinguished that liposuction, which is commonly known 'cosmetic surgery' is distinct from bariatric surgery as liposuction only removes excess fat of the body so as to improve the shape and contour of the body whereas the aim and objective of bariatric surgery was to cure the state of morbid obesity and related diseases. It was, therefore, concluded that bariatric surgery is not a cosmetic or plastic surgery covered under Section 65 (105)(zzzzk) and is covered under the Mega Exemption Notification as 'Health Care Services'.
14. In M/s. Sreyas Holistic Remedies, the Tribunal considered whether Melasma, Birthmark Treatment, Hypertrichosis Treatment, Hair Laser Comb Treatment are health care or cosmetic services. The Bench noticed that melasma and birthmark treatment requires detailed investigation and diagnosis, which are treated by qualified doctors being post-graduate in dermatology through surgical removal and medicinal treatment including preventive measures for post- treatment precautions and hence cannot be considered as cosmetic surgery. Hypertrichosis treatment and Hair Laser Comb treatment were held to be taxable under 'Cosmetic and Plastic Surgery Services'.
15. In Berkowits Hair and Skin Clinic, the Tribunal was concerned with Autologous Micrograph Treatment, which was undertaken to treat Alopecia/ Baldness, which has been recognised as illness and, therefore, the treatment was held to be covered by the definition of 'healthcare services' as given in para 2(t) of the 10 exemption notification. In so far as Radio Frequency Treatment to remove Warts, Moles and Freckles was held to be taxable on the ground that all these skin conditions are not usually life-threatening and any procedure to remove such warts, moles or freckles is undertaken to enhance physical appearance or beauty. Such removal would clearly fall under the category of cosmetic surgery.
16. From the decisions referred, it is apparent that there is a fine line of distinction in between an activity to be covered either as a cosmetic and plastic surgery or as a Healthcare service. The Commissioner has not examined the true nature of each of the services rendered by the appellant. It is necessary to set out the details of the diagnosis or procedure as well as the post treatment care which may be provided to the patient. The definition of healthcare service although specifically excludes hair transplant or cosmetic or plastic surgery but still covers the same when undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. Perusal of the impugned order shows that the Commissioner has mainly taken an overall view that these procedures result in physical enhancement and beauty without analysing the respective services. We, therefore, find it appropriate to remand the matter to the adjudicating authority to give reasoned findings on each of the services rendered by the appellant in the light of the principles laid down in the various decision cited.
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17. The submission of Shri Batra, learned Chartered Accountant for the appellant that the demand under SCN was proposed under the provisions which were not in existence during the relevant period is devoid of merits in view of the contents of the show cause notice, which specifically deals with the provisions of Section 66D read with the Mega Exemption Notification and, therefore, the services are taxable under Section 66B of the Act. Paragraph 18 and 19 of SCN, which are self-explanatory are quoted below: -
"18. As the services provided by M/s. Trichoderm are not covered in the services specified in the negative list defined under Section 66D of the Finance Act. 1994 nor they are covered by Mega Exemption Notification No. 25/2012-ST dated 20.06.2012 these services are provided in the taxable territory by them to Service recipients as mentioned above. therefore, the services are taxable under Section 66B of the Act. The Service tax is payable under Section 68(1) of the Finance Act. 1994 read with Rule 6(1) of the Service Tax Rules. 1994.
19. Thus, from the above, it appears that the services rendered by the assessee are taxable after the introduction of negative list (i.e. 01.07.2012) as prescribed under Section 66/66B of the Finance Act, 1994 (as was in existence at the material time) and the assessee is liable to pay service tax on the service rendered by them under Section 68 of the Finance Act, 1994 read with Rule 6 of the Service Tax Rules, 1994. As the assessee has not discharged its Service Tax in prescribed manner. the same is recoverable from them under Section 73 of the Finance Act. 1994 alongwith applicable interest under Section 75 of the Finance Act. 1994."
18. The appellant was, therefore, directed to show cause as to why service tax be not recovered from them under proviso to Section 73(1) read with Section 66/66B and Section 68 of the Act. We, therefore, hold against the appellant on this submission.
19. One of the grievance raised by the appellant was that the Revenue has erred in relying on the Kaccha register, which tentatively 12 records the appointments of the clients along with estimated cost and are subject to finalisation. The actual figures or income are recorded in the balancesheet, which match with the bank accounts and cash records maintained by the appellant. This seems to be a very common practice in such clinical establishments, where the client may enquire about various details pertaining to any treatment and also take an appointment but may not turn-up for it. The establishment maintains the record so that if the client finally decides and chooses to take treatment, such details help both the client, who is aware of the costing and the same is within the knowledge of the establishment. We are of the opinion, that the appellant is right in submitting that no reliance can be placed on the Kaccha register and no assessment can be made on that basis.
20. The grievance of the appellant for invocation of best judgement assessment under Section 72 needs to be rejected as the pursuant to the enquiry, details/data was sought from M/s. Urenok Software, who owned the software Zenoti, but they refused to furnish and the option available with the Department was to resort to best judgement under Section 72 of the Act.
21. The SCN proposed service tax amounting to Rs.2,61,94,416/- however, the Adjudicating Authority has confirmed the demand beyond the said amount, which is Rs.2,62,91,823/-. On the face of it, we agree with the submission of the learned Chartered Accountant that the amount not proposed in the show cause notice is not 13 sustainable as the same is beyond the scope of the show cause notice.
22. The challenge on the ground of denial of cum-tax benefit under Section 67(2) has been objected by the Revenue relying on the decision of the Supreme Court in Amrit Agro Industries Limited Vs. Commissioner of Central Excise, Ghaziabad 8, however, the context in which the observations were made are not really applicable in the present case. The Apex Court noted that because the wholesale price is usually the cum-duty price, section 4(4)(d)(ii) lays down that the value will not include duty of excise, sales tax, and other taxes, if any, payable on the goods, and therefore, if a manufacturer includes in the wholesale price, an amount by way of tax, even when no such tax is payable, then he is really, including something in the price, which is not payable as duty. He is really increasing the profit element in another guise and in such a case there cannot be any question of deduction of duty from the wholesale price because as a matter of fact, no duty has actually been included in the wholesale price. It was, therefore, held that the manufacturer has to calculate the value on which the duty would be payable and it is on that value and not the cum-duty price that the duty of excise paid unless it is shown by the manufacturer that the price of goods includes excise duty payable by him, no question of exclusion of duty element from the price for determination of value under section 4(4)(d)(ii) will arise. Whereas in the case of Commissioner of C. EX & CUS, Patna versus 8 2007(210) ELT 183 (SC) 14 Advantage Media Consultant9, the Tribunal upheld the order of the Commissioner directing the Original Authority to re-quantify the demand considering gross amount received, where the service tax was not paid as inclusive of service tax payable. Referring to the provisions of Section 67(2) of the Act, it was observed:-
"3. Service tax is an indirect tax. As per this system of taxation, tax borne by the consumer of goods/services is collected by the assessee (manufacturer/service provider) and remitted to the Government. When the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable. We find that this principle has been legislated in the following terms with effect from 18-4-2006 in Section 67(2) of the Finance Act, 1994 as amended."
23. The order of the Tribunal has been affirmed by the Apex Court 10 by dismissing the appeal filed by the Revenue.
24. The learned Chartered Accountant for the appellant has pointed out that SCN issued on November 8, 2019 for the period April 2014- June 17 (except for the period April 2017 to June 2017) is barred by limitation. The justification made by the learned Authorised Representative for the Revenue is that the facts were not disclosed to the Department, which came to their notice only at the initiation of investigation and working under self-assessment system, the appellant was required to submit the correct facts that the procedures 9 2008 (10) STR 449 (Tri.-Kolkata) 10 2009 (14) STR J 49 SC 15 are cosmetic in nature. We do not find merits in the submissions of the Revenue for the simple reason that the appellant had filed all the ST-3 Returns and maintained the audited accounts. The Department had resorted to best judgement assessment under Section 72, and therefore, in view of the decision of the Tribunal in G.D. Goenka Pvt. Ltd. Vs. Principal Commissioner, CGST, Delhi11, the error, if any, was on the part of the officer, who was responsible for the assessment. Further, there is no doubt that the issue is one of interpretation as to whether the service rendered by the appellant would fall under the health care service and would therefore, be entitled to exemption or they would be covered under the cosmetic and plastic surgery leviable to service tax. It is a settled principle of law that where the issue is one of interpretation, the element of suppression or misstatement cannot be attributed on the assessee and therefore, the extended period cannot be invoked.
25. We are of the opinion that the matter requires to be reconsidered by the Adjudicating Authority as under:-
"A. Record specific findings in respect to each of the services, whether it falls under cosmetic and plastic surgery or under healthcare services, and consequently, whether the appellant would be liable to pay tax or will be entitled to seek exemption under the notification.
B. The amount of service tax of Rs.97,407/-in the impugned order is beyond the amount proposed in the show cause notice is not sustainable and the same needs to be deducted.11
Final Order No.51088/2023 in Service Tax Appeal No.51787 of 2022 dated 21.08.2023 16 C. No reliance can be placed on the Kacha registers to assess the service tax liability of the appellant. D. The appellant is entitled to avail the cum-tax benefit.
E. The extended period of limitation cannot be invoked."
26. In view of the aforesaid circumstances, the Adjudicating Authority is required to recalculate the duty liability, accordingly. For the reasons stated above, the impugned order is hereby set aside. The appeal is allowed by way of remand. The miscellaneous application also stands disposed of.
[Order pronounced on 30th January, 2026] (Binu Tamta) Member (Judicial) (Rajeev Tandon) Member (Technical) Ckp.