Green Valley Diagnostics & Hospitals Pvt. Ltd. Vs Union of India (Gauhati High Court)
The petition concerned a private limited company operating a diagnostic centre and hospital, engaged solely in providing healthcare services through its clinical establishment. It had voluntarily obtained service tax registration, but did not file ST-3 returns on the basis that the services it rendered were exempt from service tax under Notification No. 25/2012-Service Tax dated 20.06.2012, and that exempt service providers were relaxed from filing returns under Circular No. 97/8/2007 dated 23.08.2007.
A show cause notice dated 17.09.2020 was issued alleging suppression of taxable value during FY 2014-15 to 2017-18, non-filing of ST-3 returns, and short payment of service tax amounting to ₹10.13 crore. The demand was based on third-party data received from the Income Tax Department, particularly Form 26AS and financial statements, which reflected receipts on which tax had been deducted at source. The Department treated the receipts as consideration for taxable services and invoked the extended limitation period under Section 73(1) of the Finance Act, 1994, along with interest and penalties.
In reply, the petitioner contended that the entire demand had been raised solely on the basis of Form 26AS and financial statements without examining the nature of the transactions or considering statutory exemptions. It asserted that the receipts represented healthcare services provided to patients, employees of corporate entities under healthcare arrangements, and policyholders under cashless treatment arrangements with insurance companies. These services, it argued, were exempt healthcare services rendered by a clinical establishment under Clause 2 of Notification No. 25/2012. The petitioner also submitted agreements and documentary material supporting the exempt nature of the receipts.
