2025-VIL-2015-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Revenue sharing arrangements – Tax liability – Appellants are registered with service tax department under category of Health Service – Department entertained view that Appellants are providing Business Support Services (BSS) to Diagnostic Service Providers (DSPs) – After completion of investigation, department issued show cause notices to Appellants by proposing demand of service tax under category of BSS – Adjudicating Authority confirmed demand of service tax along with interest and penalty – Commissioner (Appeals) upheld order passed by Adjudicating Authority – Whether Appellants are liable to pay Service Tax under category of BSS – HELD – Appellants have entered into agreements with DSPs for providing pathology lab and other diagnostic services in hospital. As per agreements, Appellants provides basic amenities such as space, water, electricity, etc to DSPs for functioning and DSPs install and operate their equipment in Appellant’s premises. DSPs render services to patients within hospital premises and outside hospital premises. Appellants raised invoice on patients for diagnostic services rendered in hospital and shares for receipts with DSPs in an agreed percentage. Issue involved in appeal relating to revenue sharing arrangements between Appellants and DSPs is no longer res integra, as Tribunal as well as departmental Appellate Authority, for earlier and subsequent periods, have decided issue in favour of Appellants by holding that revenue sharing arrangements are not subject to service tax under BSS. Impugned orders are not sustainable in law and are liable to be set aside – Appeals allowed
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