Custom, Excise & Service Tax Tribunal
Bombay Hospital Trust vs Commr.Service Tax- Ii Mumbai on 29 May, 2019
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
REGIONAL BENCH - COURT NO. 02
Service Tax Appeal No. 86822 of 2016
(Arising out of Order-in-Original No. 01-05/STC-III/PP/16-17
dated28.04.2016 passed by Commissioner of Service Tax-III, Mumbai)
M/s National Health & Education ...Appellant
Society
P.D. Hinduja National Hospital and MRC, 87,
Veer Savarkar Marg, Mahim, Mumbai-400016
VERSUS
Commissioner of Service Tax-III ...Respondent
Mumbai 9th Floor, Lotus Info Centre, Near Parel station, Parel (East), Mumbai-400012 WITH
(i) Service Tax Appeal No. 87215 of 2015 (Breach Candy Hospitals Trust) (Arising out of Order-in-Original No. 08-11/Pr.Commr./ST- II/PK/2015-16 dated30.06.2015 passed by Commissioner of Service Tax-II, Mumbai); (ii) Service Tax Appeal No. 86058 of 2017 (Breach Candy Hospitals Trust) (Arising out of Order-in-Original No. 58/Pr.Commr./ST-II/APSS/2016-17 dated31.01.2017 passed by Commissioner of Service Tax-II, Mumbai); (iii) Service Tax Appeal No. 87348 of 2016 (LilavatiKirtilal Mehta Medical Trust) (Arising out of Order- in-Original No. 26-30/STC-III/PP dated14.07.2016 passed by Commissioner of Service Tax-II, Mumbai); (iv) Service Tax Appeal No. 87487 of 2015 (Jaslok Hospital & Research Centre)(Arising out of Order-in- Original No. 26-29/Pr.Commr./ST-II/PK/2015-16 dated18.08.2015 passed by Commissioner of Service Tax-II, Mumbai);(v) ST/Cross/911602/2015 in Service Tax Appeal No. 85991 of 2015 (CCE Pune II)(Arising out of Order-in-Original No. dated passed by); (vi) Service Tax Appeal No. 86807 of 2016 (Commr. of Service tax-I, Pune)(Arising out of Order-in-Original No. PUN-SVTAX-000-COM-0089-15-16 dated23.03.2016 passed by Commissioner of Service Tax, Pune); (vii) Service Tax Appeal No. 87296 of 2016 (People's Medical Relief Society)(Arising out of Order-in-Original No. 20-21/ST-III-PP-2016 dated08.07.2016 passed by Commissioner of Service Tax, Mumbai III); (viii) Service Tax Appeal No. 86384 of 2016 (Shushrusha Citizens Co-op Hospital Ltd.)(Arising out of Order-in-Original No. 31-33-ST-III-PP- 2015 dated31.03.2016 passed by Commissioner of Service Tax, Mumbai III);
(ix) Service Tax Appeal No. 87028, 87031, 87032 & 87033 of 2016 (Saifee Hospital Trust)(Arising out of Order-in-Original No. 8- 11/STC-III/PP/16-17 dated24.05.2016 passed by Commissioner of Service Tax, Mumbai III); (x) Service Tax Appeal No. 87246 of 2016 (HurkisondasNurrotumdas Hospital & Research Centre)(Arising out of Order-in-Original No. 17-19/ST-III/PP/16-17 dated30.06.2016 passed by Commissioner of Service Tax, Mumbai III); (xi) 2 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 Service Tax Appeal No. 88559 & 88560 of 2014 (Kamalnayan Bajaj Hospital)(Arising out of Order-in-Original No. 19- 20/Service Tax/Commissioner/2014 dated21.04.2014passed by Commissioner of Central Excise, Customs &Service Tax, Aurangabad);(xii) Service Tax Appeal No. 87321 of 2015 (Bombay Hospital Trust)(Arising out of Order-in-Original No. 22-25/Pr. Commr./ST-II/PK/2015-16 dated30.07.2015 passed by Commissioner of Service Tax, Mumbai) Appearance:
Shri V. Sridharan, Shri D.B. Shroff, Sr. Advocates and Shri Rajeev Vagley, Shri GirishKalla, Shri V.V. Deo, Shri Shailesh Seth, Shri Vipin Jain & Shri B. Raichandani, Advocates for the Appellants/Respondents Shri Roopam Kapoor along with Shri M.K. Sarangi, Authorized Representatives for the Respondents/Appellants CORAM:
Hon'ble Mr. S.K. Mohanty, Member (Judicial) Hon'ble Mr. P. Anjani Kumar, Member (Technical) FINAL ORDER NO. A/85982-85998 / 2019 Date of Hearing: 30.11.2018 Date of Decision: 29.05.2019 Per: S.K. MOHANTY The issue involved in these appeals is identical and accordingly, same are taken up for hearing together and a common order is being passed.
2. The issue involved in these appeals for consideration, relates to the leviability of service tax under the category of "Support Services for Business or Commerce" (BSS) as defined under Section 65(104c) read with Section 65(105)(zzzq) of the Finance Act, 1994 up to 01.07.2012 and under "Support Services", as defined vide Section 65B(49) of the Act from 01.07.2012 onwards, on the difference of amount charged by the appellants-hospitals to the patients towards doctors consultation and the charges paid by them to the visiting/consulting doctors.
3. The facts involved in these appeals, in brief are as under:-
3Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 3.1. The appellants run hospitals for providing healthcare and other related services to their patients. Such services are provided through two departments, viz. In-Patient Department (IPD) and Out-Patient Department (OPD). In case of IPD, patients are admitted in the appellants hospitals; whereas, in case of OPD, the patients are treated without being admitted in the hospitals. The patients in both IPD and OPD are being treated normally by the resident doctors, who are on the payroll of the appellants and also by the panel/non-panel doctors engaged by the appellants. The appellants provide consulting rooms required by the panel/non-panel doctors for treating their (doctor's) patients in the OPD. In such cases, the appellants receive consideration from the doctors for permitting them the use of consulting room on hourly basis. The appellants discharge service tax liability in such cases under the taxable category of BSS on the consideration received from the doctors.
However, in case of the medical services provided to the patients through panel/non-panel doctors in the hospitals, the appellants- hospitals did not pay service tax, on the ground that the consideration for healthcare services are directly received by them from the patients and that appellants-hospitals do not charge the doctors for utilising the hospital facilities and equipments in the course of their performing the professional activities. Thus, according to the appellants-hospitals, the services provided by them are not confirming to the definition of BSS/Support Services, defined under the Act.
3.2. Upon investigation and scrutiny of records, the department observed that the appellants-hospitals have engaged the medical professionals/doctors on contractual basis for providing the medical services to the patients, who visit the hospitals; that the hospitals collect the charges from the patients and out of income so generated, certain amount is retained by them and the balance amount is paid to the doctors towards consultancy provided by such doctors to the patients. The department interpreted that the amounts retained by the appellants- hospitals were on account of infrastructure support provided by 4 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 the hospitals to the doctors, enabling them to carry out their profession and accordingly, such services provided by the appellants-hospitals should be categorized as taxable service under the head BSS (prior to 01.07.2012) and taxable services for the provision of infrastructural support (after 01.07.2012 under negative list regime).
3.3 On the above backdrop of the issue, the department initiated show cause proceedings against the appellants- hospitals, seeking for confirmation of the demand of service tax along with interest and for imposition of penalties. The show cause notices were adjudicated by the jurisdictional commissioners of service tax wherein, the proposals made in the SCNs were confirmed. The adjudged demands were confirmed,mainly on the ground that out of the billed amount collected from the patients, the appellants-hospitals paid certain percentage as 'professional fees' to the doctors and retained the balance amount on account of providing facilities, space/infrastructure etc., to the doctors, enabling them to carry out their professional activities. Thus, it was contended by Revenue that the services provided by the appellant-hospital should fall under the scope and ambit of taxable service under the category of BSS/Support service and the appellants should be liable to pay service tax thereon.
3.4 Being aggrieved with the adjudication orders (for short, 'the impugned orders'); the appellants-hospitals have preferred these appeals before the Tribunal. Further, Revenue has also filed appeals against the impugned orders, wherein the adjudicating authority has dropped proceedings initiated for demand of service tax on use of hospital infrastructural facilities by the doctors.
4.1 The Learned Counsels appearing for the appellants- hospitals ,at the outset, submitted that the issue arising out of the present dispute in no more res integra, in view of the order of this Tribunal in the case of Sir Ganga Ram Hospital Vs. CCE, 5 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 Delhi-I-2018-TIOL-352-CESTAT-DEL and that since Revenue has not filed any further appeal, the said order has attained finality, so far as the issues involved in these cases are concerned. It has further been submitted that by relying upon the said decision, the Tribunal in the case of CST, New Delhi Vs. M/s Holy Family Hospital, 2018-TIOL-1508-CESTAT-DEL and M/s Apollo Hospitals Vs CCE, Raipur, 2018-TIOL-2174-CESTAT-DEL has taken the stand that under identical set of facts, service tax liability cannot be fastened on the assessees.
4.2 The Learned counsels for the appellants further submitted that the patients coming for treatment are privy to the contract only with the appellants-hospitals and not with the doctors, who treated them inasmuch as there is no agreement or financial dealings between the doctors and patients for medical services provided by the hospitals, owned and operated by the appellants. It has also been stated that the entire amount billed and received from the patients are the income of the hospitals alone and the amount paid as per the agreed terms to the doctors are reflected as 'expenditure' in the books of accounts of the appellants, on which tax at source is deducted as 'Fees for professional or Technical Services' under Section 194J of the Income Tax Act. It was also argued on behalf of the appellants that the department had not brought on any evidence to show the specific nature or list of facilities provided by the hospitals to the doctors, in order to be categorised as provision of taxable service under the head BSS/ Support Services, defined under the service tax statute.
4.3. The Learned counsels for the appellants-hospitals also pleaded that the activities provided by the doctors are not covered by the phrase 'business or commerce', defined under Section 65(104c) read with Section 65(105)(zzzq) of the Finance Act, 1994. In this context, they have relied upon the judgment of Hon'ble Supreme Court in the case of G.K. Choksi & Company vs. CIT - (2008) 1 SCC 246, Hon'ble Karnataka High Court in the 6 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 case of CIT vs. Herekar's Hospital & Maternity Home - (1991) 192 ITR 525 (Kar) and the Hon'ble Gujarat High Court in the case of CIT vs. K.K. Shah - (1982) 135 ITR 146 (Guj.).
4.4 The Learned counsels also assailed the impugned orders on the ground that extended period of limitation cannot be invoked for confirmation of the adjudged demands, beyond the normal period.
5. On the other hand, the Learned ARs appearing for the Revenue reiterated the findings recorded in the impugned order and further submitted that the ratio of the decision of co- ordinate Bench of this Tribunal, in the case of Sir Gangaram Hospitals & Ors. (Supra) would not be applicable to the facts and law involved in these cases, for the following reasons:-
5.1 In Sir Gangaram's case, the contract clearly brings out that the relationship between the appellants-hospitals and doctors was that of master and servant; whereas, in the present cases, the relationship between the doctors and hospitals is a business relationship, where the doctors are not paid any money by the hospitals, but are required to pay the hospitals for every facility used by them or their patients.
5.2 Referring to the terms of contracts involved in these cases, Revenue has categorised the transactions into three parts, one is between the doctor and patients, the other one is between the hospital and patients and the third one is between the hospital and doctors. Placing reliance on the contractual norms, Revenue has contended that the services should be categorised as BSS/Support Service and not under the category of Health Care Services, as held by the co-ordinate Bench.
5.3 In these cases, the doctors are engaged in providing business/professional activities to the appellants-hospitals and thus, the activities are covered in the scope of definition of support services. It was submitted by Revenue that the decision 7 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 of this Tribunal in Sir Gangaram's case (supra) is per incuriam inasmuch as the judgment of Hon'ble Gujarat High Court in the case of Dr. K.K. Shah (supra) relied upon therein was rendered prior to the Larger Bench judgment delivered by the Hon'ble Supreme Court in the case of Barendra Prasad Ray - (1980) 2 SCC 693.
6. Heard both sides and examined the case records.
7. As per the provisions governing the service tax statute, prior to July' 2012, the value of taxable services was determined under Section 67 of the Finance Act, 1994. The statutory provisions prevalent at the material time provided that the value of any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him. After 1st July' 2012, the term "service" has been defined in Section 65B (44) of the Act to mean inter alia, that any activity carried out by a person for another for consideration. In the present cases, admittedly the appellants-hospitals did not charge the doctors at all. There is no payment by the doctors to the hospital and therefore, no consideration is received by the hospitals from the consultant doctors. Thus, in absence of any consideration being received, no service tax is required to be paid by the hospitals. On perusal of the contracts, we find that there is no privity of contract between the doctors and the patients and the patients are under no obligation to pay any amount to the doctors. The billed amount paid by the patients is reflected as the income of the hospitals alone in the books of accounts and the doctors are paid for the amount as per the contractual norms, on which the hospitals deduct the tax at source under the income tax statute. Further, we also find that the department has not brought on any evidence to show the nature of support services provided by the hospitals to the doctors. Hence, is absence of any specific allegation and discussions with any supporting evidence regarding the type of support services provided and the amount received on such account by the hospitals, service tax demand cannot be fastened 8 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 on the hospitals under the taxable category of BSS/Support Services.
8. Learned Counsels appearing for the appellants-hospitals strenuously argued that the issue arising out of the present dispute is no more open for any debate, both on facts as well as on law, in view of the decision of the co-ordinate Bench of this Tribunal in the case of Sir Gangaram Hospital (supra).On the contrary, Revenue has contended that the ratio of said decision of Tribunal is not applicable to the facts of the present case. For the sake of clarity and for ascertaining the applicability of the said decision to the facts of the present cases, the relevant observations made therein are summarised herein below:
(i) That the arrangement between the hospitals and the doctors are for the joint benefit of both parties with shared obligations, responsibilities and benefits and that the agreements do not specify the specific nature or list of facilities that can be categorized as infrastructural support to the doctors, and, that the contracts did not refer to any consideration attributable to infrastructural support service.
(ii) That Revenue has merely drawn an inference to the effect that the retained amount by the hospitals out of the total charges collected from the patients should be considered as an amount for providing infrastructure.
(iii) That the hospitals are engaged in providing health care services and that could have been done by appointing the professionals directly as employees. The same thing has been done under contractual arrangements and in such an arrangement, the doctors are engaged contractually to provide health care services. This is a mutually beneficial arrangement and a revenue sharing model.
(iv) The Tribunal disagreed with the contentions of Revenue that the Doctors are engaged in the activities of Business or Commerce.
It was held that doctors are engaged in medical profession. For this purpose, the Tribunal has relied upon the Hon'ble Supreme Court judgment in the case of Dr. DevendraSurtis AIR 1962 SC 63.
(v) The clinical establishment and Healthcare Services had been exempted and that the view of the revenue that in spite of such 9 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 exemption available to Healthcare Services, a part of the consideration received for such healthcare Services from patients shall be taxed as business support service/taxable service is not tenable and would defeat the exemption provided to the Healthcare Services by clinical establishments.
9. On proper scrutiny of the above order passed by the Tribunal vis-a-vis the relevant contracts executed between the hospitals and the doctors in the present cases, we find that the conditions in the contracts in both the cases are identical. Since, upon analysis of the contractual norms, the Tribunal in the case of Sir Ganga Ram Hospital (supra) has held that service tax cannot be levied on the transactions made between the hospitals and the doctors, and thus, the present adjudged demands confirmed on the hospitals cannot be sustained. Further, it is an admitted fact on record that Revenue has not filed any appeal against the order of the Tribunal passed in the case of Sir Ganga Ram Hospital (supra). Thus, it is evident that the said order has attained finality and the findings recorded therein cannot be disturbed for deciding identical issues, involved in the present cases differently.
10. Revenue has raised the question of law, as to whether doctors are engaged in the business/profession so that the services provided by the hospitals can be covered in the scope of the definition of support services. In this context, the Learned AR for the Revenue, in his written submission dated 26.11.2018, has stated that the Tribunal in the case of Sir Gangaram Hospital (supra) has relied upon the judgment of Hon'ble Gujarat High Court in the case of Dr. K.K. Shah (supra) to hold that there was no tax liability on BSS in the facts and circumstances of the case. It has further been stated that the said decision of Tribunal is per incuriam in as much as the judgment in the case of Dr. K.K. Shah relied upon therein was delivered prior to the date of pronouncement of judgment by the Larger Bench of Hon'ble Supreme Court in the case of Barendra Prasad Ray (supra), holding that business includes a profession.
10Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 10.1 We find that on interpretation of the provisions of Section 9(1), 14, 160(1)(i), 161 and 163(1)(b) and (c) of the Income Tax Act, 1961, the judgment was delivered by the Hon'ble Supreme Court in the case of Barendra Prasad Ray (supra), holding that there was business connection between the appellant and English Barrister and thus, the appellant should be liable to deduct TDS, as it had acted as an agent of the said barrister. In the case of G.K. Choksi & Company Vs. CIT (supra), the Hon'ble Supreme Court after considering the submissions of the appellants therein (firm of chartered accountants) that since they were engaged in the professional activities, they should be covered by the term "business" as per the judgment in the case of Barendra Prasad (supra), have held that the issue involved in both the cases were different and as such, the ratio of the said judgment has to be restricted to the situation prevailing therein and cannot be applied to every case, irrespective of its facts. Further, in the case of Herekar's Hospital and Maternity Home (supra), the Hon'ble Karnataka High Court have distinguished the ratio of judgment of Hon'ble Supreme Court in Barendra Prasad's case, observing that in the said case, the court was not concerned with the concept of "business", but with the meaning attributable to the phrase "business connection", used in Section 9(1)(i) of the Income Tax Act, 1961. Furthermore, the expression "professional activity"
was also interpreted by the Hon'ble Supreme Court in the case of Dr. Devendra M. Surti Vs. State of Gujarat - 1969 AIR 63 (SC), wherein it was held that unless the profession carried on by a person also partakes the character of a commercial nature, the professional activity cannot be said to be an activity of a commercial character. The said judgment of Hon'ble Apex Court in the case of Dr. Devendra M. Surti (supra) has also been relied upon by the Hon'ble Bombay High Court in the case of Dr. (Smt.) SubhadraMotwaniVs. State of Maharashtra & Ors. (Criminal writ petition no. 1731 of 2002) and Dr. Kavita P. TalwaniVs. State of Maharashtra& Ors. (writ petition no. 3989 of 2013), wherein the Hon'ble High Court by judgment dated 12.06.2014 and 10.07.2014 respectively have declared the 11 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 amendments incorporating medical practitioners within the definition of "commercial establishments" as ultra vires and struck down the same. In view of the above settled position of law, it cannot be said that the doctors are engaged in the activities of providing business/profession, in order to fall within the purview of the definition of taxable service under the category of BSS/Support Services.
11. In order to arrive at a definitive conclusion on the taxability of service, the main ingredients which need to be necessarily present, as per this statute, are the service, service provider, service receiver and the consideration for the service. In the instant case, the alleged service provider is undoubtedly the hospitals/ institutions; the service rendered is to the patients; remuneration is received by the hospitals/institutions and is paid by the patients.Understandably, the services rendered by the hospitals/institutions are at best medical services to the patients and by no stretch of imagination 'Business Support Services'. It is immaterial that the hospitals are paying a portion of the remuneration received to the doctors for the services rendered by them to the hospitals. It is the case of the department that the hospitals/institutions are rendering 'Business Support Services'to the doctors. In such a case, the hospitals should have charged the doctors for the services rendered to them. One cannot take a long drown conclusion that a portion of the doctors' fee paid by patients is retained by the hospitals/institutions and such retention should be treated as consideration paid to the hospitals. We have noticed that none of the agreements indicate any such arrangements between the hospitals and doctors. Counsels for the appellants submitted that wherever the Hospitals are providing infrastructural services per se to the doctors, i.e. without any reference to the patients admitted to the Hospitals, they are paying applicable service tax. Under the circumstances, it cannot be alleged that the hospitals are providing 'Business Supports Services' to the doctors. Therefore, the argument taken on the basis of discussions 12 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 between a 'Profession' and 'Business' are not relevant to the present facts of the case.
12. This tribunal, in the case of Sir Gangaram Hospital (supra) observed that "6. The proceedings by the Revenue, initiated against the appellant hospitals, are mainly on the inference drawn to the effect that the retained amount by the 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 professionals directly as employees. The same can also be done by having contractual arrangements like the present ones. In such arrangement, the doctors of required qualification are engaged/contractually appointed to provide health care services. It is a mutually beneficial arrangement. There is a revenue sharing model. The doctor is attending to the patient for treatment using his professional skill and knowledge. The appellants hospitals are managing the patients from the time they enter the hospital 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 the doctors. The retained money out of the amount charged from the patients is necessarily also for such health care services. The patient paid the full amount to the appellant hospitals and received health care services. For providing such services, the appellants entered into an agreement, as discussed above, with various consulting doctors. We do not find any business support services in such arrangement.
13Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015
7. The inference made by the Revenue that the retained amount by the hospital is to compensate 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 support. This apparently is the view of the Revenue. We are not in agreement with such proposition. Doctors are engaged in medical profession. As examined by Hon'ble Gujarat High Court in Dr. K.K. Shah (supra), though in an income-tax case, we note that there is a discernable difference between "business" and "profession". The Gujarat High Court referred to decision of Hon'ble Supreme Court in Dr. DevenderSurtis - AIR 1962 SC 63. The Supreme Court observed as below:
"There is a fundamental distinction between 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 on by an individual by his personal skill and intelligence...... and unless the profession carried on by (a person) also partakes of the character of a commercial nature" the professional activity cannot be said to be an activity of a commercial character."
8. Applying the above ratio and examining the scope of the tax entry for BSS, we are of the considered view that there is no taxable activity identifiable in the present arrangement for tax liability of the appellant hospitals."
13. We find that the facts of the case are not dissimilar to the case dealt by Tribunal. Therefore, we find that the ratio is squarely applicable. In the result, we hold that the Appellant 14 Appeal No. ST/86822/16,ST/87321/15,ST/87487/15, ST/88559&88560/14,ST/87028,87031,87032,87033/16, ST/87246/16,ST/86807/16,ST/86384/16,ST/87296/16, ST/87215/15,ST/86058/17,ST/87348/16,ST/85991/2015 hospitals/institutions are not liable to pay service tax under the category of 'Business Support Services'.
14. Alongwith the above appeals there are also another two appeals bearing Nos. ST/85991/2015 and ST/86807/2016 filed by the department against OIO No. PUN-STC-001-CUM-001-002- 14-15 dated 19.12.2014 and OIO No. PUN-SVTAX-000-COM- 0089-15-16 dated 23.03.2016 passed by Commissioner of Service Tax, Pune, wherein the Commissioner has dropped proceedings initiated for demand of service tax on use of hospital infrastructure facilities by the visiting doctors under 'Business Support Services', 'Health Check-ups and Treatment Services' under 'Business Auxiliary Services'. In view of above discussions and findings, we find no merit in the appeal filed by the department. Therefore, the department appeals are rejected.
15. In view of the above, appeals, Nos. ST/86822/2016; ST/87215/2015; ST/86058/2017; ST/87348/16; ST/87487/15; ST/Cross/911602/2015 in ST/ 85991/2015; ST/87296/ 2016; ST/86384/2016; ST/87028, 87031, 87032 & 87033 of 2016; 87246 of 2016; 88559 & 88560 of 2014 and 87321 of 2015, are allowed. Revenue appeal Nos. ST/85991/2015 and ST/86807/2016 are dismissed.
(Order pronounced in the open court on 29/05/2019) (S.K. Mohanty) Member (Judicial) (P. Anjani Kumar) Member (Technical) HK