2026-VIL-208-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax - Revenue Sharing Arrangement - Appellant is engaged in the provision of healthcare services to patients and availed certain specialized services from specialized service providers (DSPs) within the hospital premises on payment of agreed/fixed consideration/revenue - Whether the appellant's revenue sharing arrangements with the DSPs are subject to service tax under the category of 'Support Services of Business or Commerce' – HELD - The issue involved is no longer res integra and has been settled in favor of the assessee in various earlier decisions. The Circular No. 109/03/2009-ST dated 23.02.2009 recognises that transactions between two contracted parties on a principal-to-principal basis are not to be treated as a service. The appellant allowed the DSPs to install their equipment and machines and operate their respective centers in the hospital, and the diagnostic services are provided by the hospital through the patients using the expertise and machinery of the DSPs. The entire revenue from the diagnostic centers is accounted for in the books of the appellant, and the appellant pays for the services provided by the DSPs after retaining its own percentage. The service, if any, has been provided by the DSPs to the appellant and not vice versa - Further, the healthcare services provided by the appellant are fully exempted from service tax. Moreover, the issue involved was relating to the interpretation of the statutory provision, and the appellant was under a bona fide belief that healthcare services are not liable to service tax, therefore, the extended period cannot be invoked - The impugned order is set aside and the appeal is allowed
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