Applicability of service tax - business support service in a

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CA Chongtham Sanjoy Singh

Proprietor

21 Points Posted on 30 October 2012

Dear Members,

I am working in a private Hospital. Recently we recieved a notice from Service Tax Department for payment of Service Tax under the head "Business Support Services" on the income of the Hospital from Patients (payments retain by the Hospital) treated by following Doctors who are not on the payroll of the Hospital:

01. Doctors who are in a contract of Retainership with the Hospital,

02. Outside doctors who visited the Hospital for performing medical treatment in the Hospital.

As services by a Doctor & services provided by a Hospital are out of Service Tax Scope, please suggest whether the hospital is liable to pay service tax under abovementioned head on the incomes from teartment by above Doctors.

Thank you.

Replies (3)

Arun Kumar Singh

GST Advocate

13166 Points Posted on 30 October 2012

Service provided in respect of health care services by a clinical establishment, an authorised medical practitioner or para-medics is exempt from service tax under sub clause 2 of mega exemption notification no. 25/2012.

Dipjyoti Majumdar

CA in service & CS. dipmaj@

2883 Points Posted on 30 October 2012

The onus lies on the hospital to contest/defend on demands made by service tax dept. taht services are exempt from service tax levy on undernoted issues

supply of goods connected with providing of medical services also exempt ?

medical services provided by non doctors are exempt?

For example, if medicine is provided by doctor/hospital as part of treatment, then such supply of medicine etc is not sale of goods and is part of medical services, and, hence exempt. However, if goods like spectacles, diabetes measuring equipment, BP measuring equipment etc are supplied by doctor/hospital other than as part of medical treatment, then such supply arises due to intention of patient to buy them leading to separate rights arising out of sale and such supply shall not be covered by exemption.

usha khatod

proprietor

56 Points Posted on 04 April 2013

I also came to know the same thing. The department is rejecting the claim of hospital of exemption under 'Health care services' category. What they are saying, this claim is irrelevant or not applicable as the service tax is not demanded on any "healthcare Services' but the hospital is earning from the Administrative Support/facilities provided by them to the visiting consultants i.e. by way of sharing / retaining certain % which amounts to be a commercial activity and hence taxable.