The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal has ruled that tentative appointment registers, commonly known as kachcha registers, cannot be relied upon to assess service tax liability. Holding that such provisional records merely reflect enquiries or proposed appointments, and not actual services rendered or consideration received, the Tribunal set aside a service tax demand of ₹2.62 crore raised against Delhi-based clinical establishment M/s Trichoderm, which operates dermatology and trichology clinics under the brand name “Medlinks”.
The ruling was delivered by a Bench comprising Judicial Member Binu Tamta and Technical Member Rajeev Tandon in Service Tax Appeal No. 50829 of 2021, decided on January 30, 2026. The appeal arose from an order passed by the Principal Commissioner, CGST, Delhi South, which had confirmed the demand along with interest and penalties for the period 2014–2017.
Trichoderm is registered with the Service Tax Department for providing cosmetic and plastic surgery services. It also offers a wide range of dermatological and medical treatments, including acne and alopecia treatment, vitiligo surgery, cyst removal, burn scar treatment, laser procedures, hair transplant, and other dermato-surgical services. While service tax was discharged on procedures undertaken purely for aesthetic enhancement, the appellant claimed exemption for other treatments as “healthcare services” under Entry No. 2 of Notification No. 25/2012-ST.
Following search proceedings, the Department alleged that the appellant maintained two sets of records: tentative appointment details in kachcha registers and electronic data maintained on the Zenoti software. As access to the complete software data could not be obtained, the Department invoked best judgment assessment under Section 72 of the Finance Act, 1994, and issued a show cause notice dated November 8, 2019 proposing recovery of ₹2.61 crore in service tax. This was later enhanced to ₹2.62 crore in the adjudication order.
A key issue before the Tribunal was whether the services provided by Trichoderm were taxable cosmetic and plastic surgery services or exempt healthcare services. The Tribunal held that the adjudicating authority had adopted an impermissible blanket approach by treating all procedures as cosmetic merely because they resulted in physical improvement. It stressed that a service-by-service examination is required, taking into account medical necessity, diagnosis, nature of treatment, and post-treatment care.
Relying on earlier decisions such as Mohak Hi-Tech Specialty Hospital, Sreyas Holistic Remedies, and Berkowits Hair & Skin Clinic, the Bench reiterated that procedures undertaken to diagnose, treat, or cure illness, deformity, or abnormality qualify as healthcare services, even if they incidentally improve physical appearance. Only treatments undertaken purely for beautification or enhancement of looks would attract service tax.
In a significant finding on assessment methodology, the Tribunal rejected the Department’s reliance on kachcha appointment registers. It noted that such registers are commonly maintained in clinical establishments to record enquiries, tentative appointments, and estimated costs, and that many patients may never ultimately undergo treatment. The Tribunal held that actual income is reliably reflected only in audited balance sheets, bank statements, and statutory records, and that no tax assessment can be sustained solely on the basis of provisional or tentative registers.
On limitation, the Tribunal ruled that the extended period under Section 73 of the Finance Act, 1994 was wrongly invoked. It observed that Trichoderm was registered, regularly filed ST-3 returns, and maintained audited accounts, and that the dispute essentially involved interpretation of taxability. The Bench reiterated that interpretational disputes cannot be equated with wilful suppression or misstatement.
The Tribunal also allowed the appellant’s claim for cum-tax benefit under Section 67(2), holding that where service tax is not collected separately from customers, the gross amount received must be treated as inclusive of tax. It further struck down ₹97,407 of the confirmed demand as being beyond the scope of the show cause notice, holding that confirmation of any amount in excess of what is proposed in the notice is legally impermissible.
Setting aside the impugned order in its entirety, the Tribunal remanded the matter with clear directions to conduct a service-wise examination of each treatment, exclude any reliance on kachcha registers, grant cum-tax benefit, restrict the demand strictly to the show cause notice, and refrain from invoking the extended period of limitation. The appeal was thus allowed by way of remand, granting substantial relief to the appellant and laying down important principles on classification of healthcare versus cosmetic services and on permissible methods of tax assessment.
