Hair Transplant is not a life saving but a cosmetic surgery and liable to the service tax levy – Tax Tribunal. Adv. ROHiT ERANDE. ©

Hair Transplant is not a life saving but  a cosmetic surgery and liable to the service tax levy – Tax Tribunal

Adv. ROHiT ERANDE. ©

 Case Details :

Before : Customs, Excise & Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

  Service Tax Appeal No.11288 of 2013

(Arising     outofOIA-33-2013-STC-SKS-COMMR-A-AHD    dated 26/02/2013  passed by Commissioner of Service Tax-SERVICE TAX - AHMEDABAD)

Dr Sanjiv Arunchandra Vasa   Ahmedabad, Gujarat

VERSUS

C.S.T.-SERVICE TAX – AHMEDABAD                   …….Respondent

 

CORAM:       HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C.L. MAHAR

 Final Order No. A/10863-10865 /2023

DATE OF DECISION: 12.04.2023

Introduction :

The Law Study is a continuous process  and at times we come across such an important and interesting judgment. For centuries, people have been attempting to find a remedy for baldness. The baldness has always been the subject matters of funny quotes, memes and even Sanskrit Subhashita has a reference to it. खल्वाटो निर्धनः क्वचित  meaning thereby hardly any bald person is penny less. The internet tells us that while the origins of modern-day hair restoration stem from work done in Japan in the 1930s, it was not until several decades later that these innovations came to light in the West. Before any form of hair transplant came to fruition, people who were embarrassed about their hair loss had to get creative with their cover ups like Toupées, hats, wigs, hair-flaps were all popular products. But the Hair Transplantation Technique has emerged and has become an industry itself as the arguments were advanced to equalize the technique with the other life saving surgeries !. On this background, where Hair Transplant is relatively expensive procedure, this important judgment is of great importance for the Doctors and the patients, both !

 

Facts in brief :

1.  The tribunal passed a common order in different matters tagged together.

2.  The appellant is a medical practitioner doing 'Hair Transplantation' work and was registered during the period under consideration as a Service Provider under the Category - 'COSMETIC AND PLASTIC SURGERY SERVICES' from 1-9-2009. The appellant has been regularly been filing the Service Tax Return in Form No. ST-3 and paying the service tax from 1-9- 2009 but 'Under Protest'.

3.  The appellant was served with a show-cause notice dated 12.10.2011 was issued to the appellant to show cause as to why;

 

(i)          The amount of Rs.82,47,127/- received for the year 2010-11, as consideration for providing hair transplant surgery service under the category of 'Cosmetic Surgery and Plastic Surgery' service as defined under sub-clause (zzzzk) of clause(105) of Section 65 of the Finance Act, 1994 should not be considered as taxable value under the same category; and

 

(ii)         The Service Tax amounting to Rs.8,49,454/- (Rupees Eight Lakh Forty-Nine Thousand Four Hundred Fifty four only) leviable for the year 2010-11, paid by the assessee Under Protest should not be confirmed and appropriated against the demand of Service Tax from them under Sub-Section (1) of Section 73 of the Finance Act, 1994 as amended.

 

4.  After due process of law, adjudication order dated 15.05.2012 was passed thereby removing the protest of the appellant and confirming the tax liability of Rs.8,49,454/- and appropriating this amount of Rs.8,49,454/- already paid by the appellant under the taxable category of 'Cosmetic Surgery and Plastic Surgery' service as defined under sub- clause(zzzzk) of clause(105) of Section 65 of the Finance Act, 1994 and vacating the protest of the appellant. Therefore the Appeal.

 

Arguments on behalf of the Appellants :

5.  It was argued the service activity of the appellant i.e. “Hair Transplantation” is not taxable under the category of 'COSMETIC AND PLASTIC SURGERY SERVICES' as it fell within the exception of surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma‟ of the definition of 'Cosmetic And Plastic Surgery Services' provided under sub- clause(zzzzk) of clause(105) of Section 65 of the Finance Act, 1994.

 

6.  To elaborate the nature of procedures undertaken by the appellant he explained that to have hair on the entire head is but natural and normal and, therefore, a bald person is certainly 'sub-normal'. It is proven by the medical science that baldness occurs due to defective genes in presence of androgens. This genetic deformity is present at birth. Every human is born with hair on head and this is one of the parts of the body.

 

7.  It was also contended that due to 'Androgenetic Aloepecia', one begins to loose hair after adolescence when androgen levels rise. Any human being when he or she looses any part of the body like eye, finger or hair; he or she would obviously look ugly and/or below normal.

 

8.  The Counsel further argued that the hair Transplantation procedure is mainly carried out for the condition called "Androgenetic Aloepecia" (Male or Female pattern baldness) which is the most common cause of hair loss. Therefore, the whole idea is to enable the person to look like a normal person. By Hair Transplantation, an attempt is made to re- establish normalcy of a human being by reconstructing the part of the body lost due to genetic birth defect and bringing the look from ugly (sub-normal) to normalcy.

 

9.  It was contended that it not only helps in restoring the missing organ but also helps in restoring the confidence of an individual and improves his interaction socially and professionally and thus the appellant has not been making normal organ or normal Hair more beautiful by changing its size, shape, colour, surface, texture, consistency or appearance but is totally reconstructing the missing organ of the body by harvesting hair from the back and side of the head or other parts of the body and replanting the same over the bald areas and an attempt is made to restore the normalcy and ensure the normal growth of hair on the bald area of the head and, therefore, it is incorrect to say that a bald person is made more beautiful due to Hair Transplantation. In fact, no physical form or function is changed and hair grows like any other normal hair. Therefore, in medical parlance, Hair Transplantation is not known as a 'cosmetic' surgery but is known as a 'restorative' surgery.

 Arguments for the Service tax Dept.

 10.          It was argued that the activity or service of Hair Transplantation rendered by the appellant is beyond doubt 'Cosmetic surgery' and the Hair Transplantation is not the surgery to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma. It is mainly performed as per the wish of client for restoration of makeup of his appearance and cosmetic purpose.

11.          The Dept. Cousnel relied upon CBEC's letter F.No:354/ 157/2009-TRU dated19.11.2009, wherein it is clarified at point No. 10 that :

 "Hair Transplantation is generally undertaken as a means for preservation or enhancement of an individual's physical appearance or beauty. It is not a congenital defect that is present at birth. In view of the same, Hair Transplantation being g procedure that is done to preserve/ enhance one's physical appearance, is covered in the scope of Service Tax. "

 HELD :

12.      The Tribunal began its finding with the words that “We are not inclined to accept the view of the Ld. Counsel for the appellant that the expression “surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma” could be applied to procedure performed on persons who gradually go through a hair loss at some later stage of life.”

 13.      The Tribunal observed that Hair loss is a normal process which affects almost every person at some stage of life sooner or later and we can understand that genes play a role in preserving hair to humans and when a person lose hair at some stage of life it can be a combination of genes, life style and environmental processes. In fact, every disease in a body which is not due to injury or trauma can be due to a faulty genes. It further said, in our view, the test before us is to examine whether Hair Transplant is a medical procedure which fits into exclusion categories of definition of cosmetic and plastic surgery. The Tribunal referred to the definition of what is meant by taxable service as envisaged under clause (zzzzk) of Clause 105 of Section 65 of  Finance Act, 1994 , which reads as follows:-

 “Taxable Service means any service provided or to be provided to any person, by any other person, in relation to Cosmetic Surgery or Plastic Surgery, but does not include any surgery undertaken to restore or reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, degenerative diseases, injury or trauma.”

14.          Then the Tribunal held it can be seen that Hair Transplant is neither undertaken to restore or reconstruct anatomy or its functions, nor the procedure of hair transplant restores developmental abnormalities degenerative diseases, injury or trauma. We find that hair transplant is a medical procedure to improve outer look of the body for time being and it does in any way contributes to the anatomy or functions of human body.

15.          Then it observed , we also find that the medical procedure undertaken by the appellant is a process which is not opted by every person affected with hair loss, it is only a few affluent or self physical appearance conscious persons who undertake such surgery, the other persons affected by hair loss also live a normal life without any „sub-normal‟ condition as claimed by learned Chartered Accountant.

 16.          Lastly it made important observations that it is also normally seen that the Hospitals who undertake procedure of Hair Transplantation advertise/ display their activity not as a disease to be cured but they claim that the procedure taken by them enhances physical appearance. So in our view, only diseases such as „Congenital atrichia‟ or „hypotrichosis‟ which are unique conditions of hair loss which exhibit at birth or early stages during childhood could only be considered congenital defects for the purpose of exemption and therefore it was held that in  view of entire above discussion, we hold that the Hair Transplant is a cosmetic surgery and liable to the service tax levy. Accordingly, we uphold the impugned order and accordingly appeals are dismissed.

Thanks & Regards.

Adv. ROHiT ERANDE. ©

Pune