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2018 (12) TMI 474 - AAR - GSTComposite supply or not - Bundled services - principle supply is exempt supply - Health care services - inpatient services - outpatient services - input tax credit - Held that:- Since the healthcare services are exempt from tax under section 11, the same are exempt supplies. But the definition of taxable supplies includes those supplies of goods which are leviable to tax and chosen to be exempted under section 11 and hence the exempt supplies also fall under the category of taxable supplies and hence the supply of goods and services supplied by the applicant company in conjunction with the healthcare services fall under the definition of “composite supply” as the services of supply of food and medicines to the patients are as advised by the doctor or nutritionists. But in case where the supply of food is not as advised by the doctor or nutritionists and is supplied to the patients, then such supply of food cannot be treated as “naturally bundled” supplies and supplies made in conjunction with each other and hence are separate supplies and needs to be treated not as composite supplies Medicines supplied to the inpatients - Held that:- They form part of the healthcare services supplied to the concerned patients and hence are part of the composite supplies of health care services where the principal service is “healthcare services” and is exempt from tax vide Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 - However supplies of medicines or food and drinks to persons other than patients, like attendants of the patients and when supplied to the patients not as advised by the doctor or nutritionists, then such supplies would not form part of the composite supplies and would attract applicable tax. Medicine supplied to outpatients - Held that:- The doctors prescribe the medicines and the patients, if they are free to purchase the medicines from any pharmacist (need not be from the same hospital), then such purchase of medicines from the pharmacies of the applicant cannot be treated as a part of the composite supplies as they are independent of the healthcare services provided by the applicant. Similar treatment also needs to be provided in case of food and drinks supplied to patients - But in case where the supply of medicines and food and drinks form part of the supply of healthcare services and there is no choice for the patients to choose them separately, then they would form a composite supply with healthcare services being the principal supply. CENVAT Credit - Held that:- Since the applicant is using the inputs and input services in the course or furtherance of his business, credit of such tax paid on such inward supplies can be claimed by him - The healthcare services being an exempted supply, either as an individual supply or as a composite supply, credit of input tax claimed which is attributable to such supplies of healthcare services needs to be reversed. The reversal of input tax credit claimed shall be made as per the provisions of section 17 of the CGST Act 2017 read with Rule 42 of the Central Goods and Service Tax Rules, 2017. Ruling:- The two or more supplies of goods or services or both which are naturally bundled in which the principal supply is exempt and others are taxable can be treated as a composite supply of the principal supply if such principal supply is not a non-taxable supply as per sub-section (78) of section 2 of the Central Goods and Service Tax Act, 2017 and such composite supply with the principal supply being exempt supply would be treated as an exempt composite supply. The applicant is eligible -to claim credit of input tax credit only on for such taxes paid on the inputs, input services and capital goods which are attributable to the supplies of goods or services which are taxable under the provisions of the Central Goods and Services Tax Act, 2017 and not attributable to exempt supplies of goods or services under the Central Goods and Services Tax Act, 2017.
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