2026-VIL-279-CESTAT-CHD-ST
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SERVICE TAX CESTAT Cases

Service Tax on revenue sharing between hospital and diagnostic service providers - Appellant entered into agreements with various diagnostic service providers (DSPs) to provide pathology lab and other diagnostic services in the hospital premises. As per the agreements, the appellant provides basic amenities to the DSPs for functioning, and the DSPs install and operate their equipment in the appellant's premises. The DSPs render services to patients within and outside the hospital premises, and the revenue is shared between the appellant and the DSPs in an agreed percentage - Whether the revenue sharing arrangement between the appellant hospital and the DSPs is liable to service tax under 'Business Support Services' - HELD - The revenue sharing arrangement between the appellant and the DSPs is not liable to service tax under 'Business Support Services'. The Tribunal relied on its earlier decisions in the appellant's own case as well as cases of its sister units, where it was held that such revenue sharing arrangements on a principal-to-principal basis are not taxable services. The agreements between the parties clearly show that it is a revenue sharing arrangement and there is no payment of any service charges by the DSPs to the appellant. The services provided by the appellant, if any, would qualify as 'healthcare services' which are exempt from service tax – Further, the extended period of limitation cannot be invoked as the appellant was under a bona fide belief that healthcare services are not liable to service tax - The impugned order is set aside and the appeal is allowed
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