CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL CHENNAI REGIONAL BENCH – COURT No. I Service Tax Appeal No. 41395 of 2016 (Arising out of Order-in-Original No.C.No.V/VCES/30/232/2014-ST,02/2016-(ST-COMMR.), dated 16.03.2016 passed by the Commissioner of Central Excise, No.1, Foulks Compound, Anai Road, Salem 636 001).

S K Hospital ...Appellant

9 Ram Nagar, Gobichettipalayam Erode 638 452 Versus Commissioner of Central Excise and Service Tax ...Respondent No.1 Foulks Compound, Anai Road Salem 636 001 APPEARANCE:

Shri M.N. Bharathi, Advocate for the Appellant Shri N. Satyanarayana, Authorised Representative for the Respondent CORAM:

HON’BLE MR. M. AJIT KUMAR, MEMBER (TECHNICAL)

HON’BLE MR. AJAYAN T.V., MEMBER (JUDICIAL)

FINAL ORDER No.40503/2026 DATE OF HEARING:13.01.2026 DATE OF DECISION : 17.04.2026 Per Mr. AJAYAN T.V.

SK Hospital, the appellant herein, has preferred this appeal challenging the Order in Order-in-Original No. C.No.V/VCES/30/232/2014-ST,02/2016-(ST-COMMR.), dated

16.03.2016 (the impugned order).

2. Relevant facts are that pursuant to verification conducted by Departmental officers, it was noticed that the appellant who is a service provider registered under the category “Health Checkup and Treatment Services”, has not paid service tax on the gross amount charged and received directly from M/s. Star Health and Allied Insurance Company Limited and other insurance companies for the period from 01.07.2010 to 30.04.2011. During the period 01.07.2010 to 30.04.2011, the appellant provided medical treatments to patients covered under various medical insurance schemes including the “Kalaignar Kapitu Thittam”.

During the said period, medical services were taxable if the payment was made directly by an insurance companies or business entity to the hospital. On 30.12.2013, the appellant opted for the voluntary Compliance Encouragement Scheme (VCES), declaring a taxable value of Rs.11,78,900/- and paying tax of Rs.1,21,427/-. A discharge certificate (VCES - 3) No.142/2013 dated 30.01.2014 in terms of the subsection (7) of Section 107 of the Chapter VI of the Finance Act 2013 was issued by the designated authority.

3. Subsequently, on verification of hospital records conducted by the department, it was seen that the appellant had actual gross receipts of Rs.44,14,824 for the disputed period. Hence, the department being of the view that the appellant has failed to declare their correct service tax liability in the VCES -1 declaration filed, issued a Show Cause Notice (SCN) invoking the extended period of limitation as per proviso to Section 73 (1) of the Finance Act 1994 (Act), read with section 111 (1) and Section 111 (3) of Chapter VI of the Finance Act 2013, demanding the short paid an amount of Rs.3,33,300/-, along with applicable interest and proposing imposition of penalties under Section 76, 77 and 78 of the Act. After due process of law the Adjudicating Authority confirmed a demand of Rs.2,90,990/- appropriated the amount of Rs.1,21,427/- and Rs.1,59,945/- paid by the appellant against the said demand. The order also demanded interest and appropriated an amount of Rs.4,421/- paid against such interest demand and further imposed an equivalent penalty of Rs.2,90,990/- under Sec.78 of the Act as well as a penalty of Rs.10,000/- under Section 77 (2) of the Act. An amount of Rs.10,000/- paid towards the above penalty was also appropriated vide the said order.

Aggrieved, the appellant has preferred this appeal.

4. Shri M.N. Bharathi, Ld. Advocate appearing for the appellant contended that the new levy on medical services in terms of sub-clause (zzzzo) of section 65 (105) has been exempted vide notification No. 30/2011-S.T., dated April 25, 2011. It was therefore argued that the earlier levy on certain services provided by hospitals imposed in the previous year, having been substituted by the new entry, will not be applicable anymore.

Reliance was placed on the letter D.O.F. No.334/3/2011 -TRU dated

25.04.2011.

5. Without prejudice, the