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2020 (10) TMI 810 - AAR - GSTInput Tax Credit - medicines supplied to patients admitted in hospital - medicines supplied to patients treated as out-patients - medicines supplied to other than inpatients and out-patients - supply of food and beverages to the patients admitted in hospital. Input tax credit - medicines supplied to patients admitted in hospital - restriction of credit on such supply - HELD THAT:- The treatment services for diseases are “health care services” as defined under Notification No.12/2017- Central Tax (Rate) dated 28.06.2017 and supply of health care services provided by a clinical establishment is exempt from the levy of tax as per entry No. 74 of the said notification supra. Since the output supplies are exempt, the applicant is not eligible to claim the input tax paid on the inward supplies of medicines that are used for providing “health care services” to the inpatients. Input tax credit - Supply of medicines to the out-patients - restriction on credit - HELD THAT:- The applicant, while providing treatment to the outpatients, uses certain consumables such as medicines, bandages, cotton, etc. Hence the medicines, cotton and bandages are consumed in the provision of health care services and the output is only health care services. Hence there is no separate / distinct supply of medicines, bandages, cotton etc., and since they are used in the supply of exempt health care services, the impugned supply can't be a composite supply. Therefore the applicant is not eligible to claim input tax credit on the taxes paid by the applicant on the inward supplies of such goods. Input tax credit - supply of medicine to the customers - restrictions on such credit - HELD THAT:- The applicant, with regard to the supply of medicines & other goods to the customers, is selling the medicines as a trader and hence they are liable to collect and pay the applicable tax on the goods sold and also is eligible to claim input tax credit like any supplier of taxable goods, subject to any restrictions in Section 17 of the GST Act. Input tax credit - Supply of food & beverages to the inpatients - restriction on such credit - HELD THAT:- It is pertinent to mention here that the Authorised Representative during the personal hearing has confirmed that the applicant do not allow the inpatients to consume outside food. Thus it is inevitable that the impugned supply becomes naturally bundled with the treatment service i.e. health care service and the supply becomes composite supply, which is an exempted supply, under entry No.74 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. Thus the applicant can't claim the input tax credit - The input tax credit is to be restricted on supply of food & beverages supplied to inpatients and is part of the health care services.
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