ITAT Mumbai Holds Ambulance Services Liable to Attract 10% TDS Under Section 194J

The ITAT Mumbai held in favour of the assessee company, holding that the ambulance services provided by BVG India Ltd are liable to be taxed under Section 194J (10% TDS) and not Section 194C (2% TDS). However, issues concerning HLL Lifecare and Faber Sindoori have been remanded for fresh examination, as their agreements and service nature were not adequately analysed.

The dispute in the present case was regarding whether TDS (Tax Deducted at Source) should be deducted under Section 194C (2%) or Section 194J (10%) on the payments made to service providers under the National Health Mission.

The assessee, State Health Society Maharashtra, had made TDS under Section 194C of the Act, treating the work as a contract. While during assessment, tax authorities treated it the same as professional services liable to be deducted under Section 194J of the Act. The tax authorities argued that services provided by companies including BVG India Ltd, HLL Lifecare Ltd, and Faber Sindoori Management Services Pvt. Ltd were professional in nature and, consequently, liable for TDS at 10% under Section 194J, instead of at 2% under Section 194C.

When the tribunal analysed the facts of the case, it noted that the company, BVG India Limited, is engaged in providing ambulance services, and an ambulance is equipped with advanced medical equipment, medicines, and trained emergency medical technicians, hence functioning as a “mini hospital on wheels”. Therefore, such services cannot be covered under Section 194C (TDS at 2%). In conclusion, it was held that the tax authorities had rightly treated the services as professional medical services covered under Section 194J.

However, in the case of companies HLL Lifecare Ltd and Faber Sindoori Management Services Pvt. Ltd, the tribunal observed that the tax authorities had not properly analysed the terms and conditions of the agreement. The assessee claimed that HLL Lifecare Ltd mainly provides logistical services, including collection and transportation of blood samples.

On the other hand, Faber Sindoori Management Services Pvt. Ltd is mainly involved in handling maintenance and upkeep of hospital equipment. Considering the fact that these aspects were not properly examined, the tribunal sent the case back to the tax authorities for fresh adjudication.

In conclusion, the appeal linked to BVG has been dismissed, while matters related to HLL and Faber Sindoori have been sent for fresh consideration. Overall, the appeal has been allowed for statistical purposes.