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2021 (7) TMI 537 - AAR - GSTClassification of supply - composite supply or bundled supply - healthcare services - supply of medicines, surgical items, implants, stents and other consumables used in the course of providing health care services to inpatients admitted to the hospital - supply of food to all the inpatients - eligibility of exemption under N/N. 12/2017 read with Section 8(a) of GST - avallment of ITC - common purchase of medicines and surgical items which are ultimately supplied on actual basis to inpatients and outpatients. HELD THAT:- Inpatient services falling under SAC 999311 means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and / or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services - The primary purpose of the hospital is to provide treatment to the patients approaching them. The basic intention of the patients visiting the hospital is to get treatment for their ailment. Depending upon the severity of the illness the patient may require immediate medical attention, continuous monitoring etc. Therefore, according to their health condition they will be treated as out-patient or admitted as inpatient. The patients admitted to a hospital for treatment expect that proper diagnosis of the disease is made and treatment including appropriate medicines, surgical procedures if necessary, consumables and implants required along with proper diet is administered to them in the most efficient manner so that they can regain their health within the shortest possible time and resume their activities. Therefore, the medicines, implants, consumables and foods supplied in the course of providing treatment to the patients admitted in the hospital is an integral part of the health care service extended to the patients. The CBIC has in Para 5 (3) of Circular No.32/06/2018-GST dated 12.02.2018 clarified that food supplied to the inpatients as advised by the doctor / nutritionist is a part of composite supply of healthcare and not separately taxable. Thus, the applicant is a clinical establishment as defined in Para 2 (s) of the Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 and the supply of medicines, surgical items, implants, stents, food and other consumables to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at SI No. 74 of N/N. 12/2017 Central Tax (Rate) dated 28.06.2017. Availment and utilisation of input tax credit - common purchase of medicines and surgical items which are ultimately supplied on actual basis to inpatients and outpatients - HELD THAT:- The eligibility of credit of tax paid on the inputs and input services used for taxable as well as exempted supplies are governed by the provisions of Section 17 (2) of the CGST Act and Rule 42 of the CGST Rules, 2017. Rule 42 of the CGST Rules, 2017 prescribes the manner of determination of input tax credit in respect of inputs or input services and reversal thereof - Hence, where common credit on inputs or input services partly used for effecting taxable supplies and partly for effecting exempt supplies are availed the eligible input tax credit shall be calculated as per the formula prescribed in Rule 42 of the CGST Rules, 2017 and the common credit pertaining to exempt supplies calculated as per the said formula shall be reversed.
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