AMBULANCE SERVICES UNDER NATIONAL HEALTH MISSION PROGRAM

[Mr. M. GOVINDARAJAN]

National Health Mission Program

The National Health Mission (NHM), a flagship programme of the Government of India, the Central Government provides technical and financial support to states to strengthen healthcare systems including for free ambulance services (Dial 102/108 services).

• Dial 108 is the emergency response system primarily designed to attend to patients of critical care, trauma and accident victims etc.,
• Dial 102 services essentially are for basic patient transport aimed to cater the needs of pregnant women and children’

Many states are operating the ambulance service on an outsourced model and these services are funded under the NHM and provided free of cost to all patients.

This entire project involves three types of activities,-

• one by the Government for the public;
• the second by the private service provider for the public;
• the third, by the private service provider for the Government. 

In respect of the first and the second types of activity i.e. the ambulance services being provided by the Government and private service providers to the patients, neither the State government nor the PSP charges any fee from the patients who avail of these ambulance services.  The private service provider charges a fee from the State Government for carrying out  the third type of activity.

A query has been raised by the concerned Ministry whether the private service provider (PSP) is liable for payment of service tax.

The Central Government analyzed the query raised by the Ministry and issued clarifications as to the applicability of service tax for the services raised in the query vide Circular No.210/2/2018-Service Tax, dated 30.05.2018.

Health services under service tax provisions

The Government analyzed the notification giving mega exemption vide Notification No. 25/2012-Service Tax, dated 20.06.2012.  Sl. No. 2 of the said Notification exempted Health care services by a clinical establishment, an authorized medical practitioner or para-medics.  Vide Notification No. 06/2015-Service Tax, dated 01.03.2015, with effect from 01.04.2015 the services provided by way of transportation of a patient in an ambulance, other than those specified  above also got exempted.

Services provided to the Government

In the above said Notification the serial No. 25(a) gave exemption to the services provided to the Government.   For the period from 01.07.2012 to 10.07.2014 the services provided to Government, a local authority or a governmental authority by way of "(a) carrying out any activity in relation to any function ordinarily entrusted to a municipality in relation to water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation.  For the period from 11.07.2014 to 30.06.2017 the services provided to Government, a local authority or a governmental authority by way of (a) water supply, public health, sanitation conservancy, solid waste management or slum improvement and up gradation.

The Central Government observed that the phrase "public health" is a general term and will cover a number of activities which ensure the health of the public. In the Ministry of Health & Family Welfare's reference, it has been stated that this activity of providing free ambulance services by the states is funded under the National Health Mission (NHM). One of the core values of the NHM enlisted by the Framework for implementation of National Health Mission (2012-2017) is to strengthen public health systems as a basis for universal access and social protection against the rising costs of health care. As a part of its goals, outcomes and strategies the framework has categorically stated that NHM will essentially focus on strengthening primary health care across the country. The Framework further states that assured free transport in the form of Emergency Response System (ERS) and Patient Transport Systems (PTS) is an essential requirement of the public hospital and one which would reduce the cost barriers to institutional care.

The Circular clarified that the provision of ambulance services to State governments under the NHM is a service provided to government by way of public health and hence exempted under notification no 25/2012-Service Tax dated 20.06.2012.

Position in GST regime

The exemption given to the Health Services under the service tax regime has also been extended to GST regime.  Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate), dated 28.06.2017 the services by way of-

• health care services by a clinical establishment, an authorised medical practitioner or para-medics;
•  services provided by way of transportation of a patient in an ambulance, other than those specifiedabove.

under Service Accounting Code 9993,  are given exemption.

Sl. No. 3 of the said Notification deals with the exemption given to the services provided to the Government.  The said serial no provides that the pure services (SAC 99) (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.

Sl.No. 3A was inserted vide Notification No. 2/2018-Central Tax (Rate), dated 25.01.2018.    The said 3A gives exemption to the Composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent. of the value of the said composite supply provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution.

Vide Circular No. 51/2018-Central Tax (Rate), dated 31.07.2018 the Central Government clarified that-

• the clarification contained in the Circular No. 210/2/2018- Service Tax dated 30th May, 2018 with regard to the services provided by Government and PSPs by way of transportation of patients in an ambulance is applicable for the purpose of GST also, as the said services are specifically exempt under notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 vide Sl. No. 74.
• the service provided by PSPs to the State Governments by way of transportation of patients on behalf of the State Governments against consideration in the form of fee or otherwise charged from the State Government, it is clarified that the same would be exempt under-

• Sl. No. 3 of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 if it is a pure service and not a composite supply involving supply of any goods, and

• Sl. No. 3A of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 if it is a composite supply of goods and services in which the value of supply of goods constitutes not more than 25 per cent of the value of the said composite supply.