No Service Tax on health care services provided by the clinical establishments by engaging consultant doctors

Last updated: 19 January 2023

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The CESTAT has ruled that clinical establishments providing healthcare services are exempt from Service Tax, even when engaging consultant doctors. The tribunal found no legal justification for taxing the hospital's share of revenue, stating that the arrangement with doctors is a revenue-sharing model for mutual benefit, not a business support service. This decision upholds the exemption provided to healthcare services.

Court :
CESTAT, New Delhi

Brief :
The CESTAT, New Delhi in the matter of M/s. Maharaja Agrasen Hospital Charitable Trust v. the Commissioner of Service Tax, New Delhi – III [Service Tax Appeal No. 52193 of 2016 dated January 2, 2023] set aside the demand order passed by the Revenue Department confirming the demand of service tax under the head business support services. Held that, there is no legal justification to tax the share of clinical establishments on the ground that they have supported the commerce or business of doctors by providing infrastructure and such assertion is neither factually nor legally sustainable. Further held that, clinical establishments providing health care services are exempted from the levy of Service Tax ("ST").

Citation :
Service Tax Appeal No. 52193 of 2016 dated January 2, 2023

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