2025-VIL-2067-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Healthcare services – Tax liability – During verification of accounts, department found that Appellant have received certain amounts on provision of services, but have not paid service tax on amounts received – Department issued show cause notice to Appellant by proposing demand of Service Tax under various taxable categories – Joint Commissioner confirmed demands as proposed in show cause notice – Commissioner (Appeals) affirmed order passed by Joint Commissioner – Whether consideration received for deputing doctors and managing another hospital under continuing cooperation and collaboration by joining hands with other hospital are taxable separately as Management/Consultancy Service and Manpower Recruitment Service – HELD – Perusal of Memorandum of Understanding (MOU) between parties clearly showed that contracts between Appellant and various hospitals are on principal-to-principal basis and are in nature of sharing revenue. As per contracts, Appellant is required to provide knowhow and manpower and MOU Hospitals will provide infrastructure and funds. Revenue earned from patients is shared between Appellant and MOU Hospitals and no taxable service is being provided by Appellant to other hospitals. There is absolutely no stipulation of payment of any service charges by MOU hospitals to Appellant and the contract is purely for sharing of revenue. Service related to health care clinical management is exempt from Service Tax, as there is no element of service and it is like a hospital managing its own hospital. Receipts characterized as royalty/management fee are integrally connected with provision of healthcare services and do not constitute a separate taxable Management or Business Consultancy Service. Since reimbursement of salaries in respect of staff deputed by Appellant to MOU Hospital is made on an actual cost basis and employees continue to be on payroll of Appellant, it does not constitute a taxable Manpower Recruitment or Supply Agency Service. Impugned demand cannot be sustained. Order under challenge is set aside – Appeal allowed
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