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A thing of beauty is no more a joy forever

MONISH BHALLA 
on 13 November 2009

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Cosmetic surgeries are subject to Service Tax


We are into Cosmetic and Beauty related services and are regularly paying Service Tax on the beauty treatment services since 2002. Are we liable to pay Service Tax on Medical services including Cosmetic Surgeries conducted with respect to beauty treatment?

It does not take much time for the Government to reverse their stand and the same is true in case of Cosmetic treatments. The CBEC vide their Circular No. B11/1/2002-TRU dated 01/08/2002 had clarified that the beauty treatment services do not include plastic surgery/ cosmetics surgery done to improve the appearance, as they are not the kind of service provided by the beauty parlours. These are more appropriately classifiable as medical services.


However with the insertion of new definition under Section 65(105) (zzzzk) of the Finance Act, the Taxable services now include any service provided or to be provided to any person, by any other person, in relation to cosmetic surgery or plastic surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma.


Here it may be note that definition does not suggest that the person giving the service is to be a qualified Doctor by profession. The Government further clarified vide Circular No. 334/13/2009-TRU dated 06.07.2009 certain inclusions and exclusions from such Taxable services. Accordingly Taxable services now include cosmetic surgeries or aesthetic surgeries carried out to improve overall figure which includes abdominoplasty – more commonly known as tummy tuck.


Abdominoplasty or "tummy tuck" is a cosmetic surgery procedure used to make the abdomen more firm. The surgery involves the removal of excess skin and fat from the middle and lower abdomen in order to tighten the muscle and fascia of the abdominal wall. This type of surgery is usually sought by patients with loose tissues after pregnancy or individuals with sagging after major weight loss. Other surgeries like bletharo-plasty which improves the eyelids; mammoplasty; buttock augmentation and lift are those covered under Taxable service category. The Board further clarified that surgeries conducted to reshape the nose-Rhinoplasty and those carried out for improving the shape of the ear-Otoplasty are also Taxable.


Some of the most common cosmetic surgeries including Rhytidectomy (face lift); liposuction (removal of fat from the body); brow lift; cheek augmentation; facial implants; lip augmentation; forehead lift; cosmetic dental surgery; orthodontics; aesthetic dentistry; laser skin surfacing etc are also under the ambit of Service Tax.


The definition and the interpretation of medical terminology and jargon opens a Pandora box  for future ambiguities and litigations. On close examination of these definitions one can see that there are many exclusions from Service Tax which includes surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma.


A degenerative disease is a disease in which the function or structure of the affected tissues or organs will progressively deteriorate over time, whether due to normal bodily wear or lifestyle choices such as exercise or eating habits. Diabetes, Cancer, Heart Disease, Osteoarthritis, Osteoporosis, Parkinson's Disease are few examples of degenerative diseases.  Congenital defects are those commonly known as birth defects. Trauma may be of various forms including physical and psychological. A Rhinoplasty or Nose Job surgery carried out on a patient having such defect from birth will thus be excluded from Service Tax while those conducted on a Ramp Model may attract Service Tax.


A Liposuction on a morbid obese person who has the same due to development abnormality or congenital defect may escape Service Tax while the others will have shell out the same. Such ambiguities and many other will be on a rise till the time the Government clarifies and decipherers the medical jargons. Till that time A Thing of Beauty is no More a Joy Forever!




Category Service Tax
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MONISH BHALLA 

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