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TMI Blog2019 (7) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... he hospital through the hospital owned pharmacy to the out-patients, is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- "Statement of relevant facts having a bearing on the question(s) raised The applicant M/s. Terna Public Trust, is a holder of GSTIN 27AAATT2628P1ZZ, (hereinafter referred to as 'the Applicant' for the sake of brevity) is having its office address as given above. The Applicant runs a hospital and Research Centre under the name and style 'Terna Specialty Hospital & Research Centre' at the address Plot No. 12, Sector 22, Nerul (West), Navi Mumbai, PIN- 400706 (her ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spensing medicine and consumables to the inpatients or outpatients of the hospital. 4. Under pre-GST period there were several decisions pertaining to the point that the supply of medicines, surgical items, x-ray etc. to the patients in the course of treatment by hospital cannot be said to be sale. 5. As per the GST Act the 'clinical establishment' means a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnostics or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. 6. Hospital owned Pharmacy is an outlet to dispense medicines, surgical items and other allied items based on prescriptions. 7. Patients are admitted to a hospital only when they are extremely ill or have severe physical trauma. As far as an inpatient is concerned, hospital is expected to provide lodging, care, medicine, surgical items, other allied items and food as part of treatment under supervision till his/her di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th care and not separately taxable. 13. The Applicant is of the view that the medicines, surgical items, implants, consumables and allied items supplied through hospital owned pharmacy to both inpatients and outpatients under the prescription of the doctors are incidental to the health care services rendered in the hospital and beyond the ambit of taxation being health care services. Food supplied & Room provided on Rent to in-house patients is also, according to the applicant, not taxable. 14. Hence the Applicant seeks advance ruling on the liability of hospital under SGST /CGST Act on the supply of medicines and allied items through the hospital owned pharmacy. 15. Enclosures with the application The following are the enclosure with this application- i) Bill of Supply No. PH/HD/200609 dated. 11.02.2019 (for in patients- IPD- in- patient Department- admitted to Hospital and given Room). GST is not charged on these Bills. ii) GST Bill No BCRMD/124560 dated. 11.02.2019 (for out patients - OP- Registered and treated by Hospital, but not admitted). GST is charged on these bills at present. iii) GST Bill NO BCRMD/124510 dated 11.02.2019 (for General Public not registered as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and food from hospital canteen under the supervision of dietician is provided to the in-house patients as a part of overall health care. 4. GST is not charged on the medicines, surgical items, consumables and allied items used for treating such in-house patients (Patients admitted in hospital). Further, for a room provided on rent and food provided from hospital canteen to the in-house patients is also not charged to GST. 5. However, at present the GST is charged to out-patients, (OPD patients) treated by Hospital who buy medicines, surgical items, consumable, implants and other allied items for their use. Further very few walk-in customers with prescriptions of outside doctors/Hospitals also buy medicines & allied items from hospital owned Pharmacy which are also charged GST. 6. The applicant submits that the medicines, surgical items and other allied items supplied through the pharmacy is incidental to the health services rendered in the hospital. The pharmacy is meant largely for dispensing medicine and consumables to the inpatients or outpatients of the hospital. 7. The Applicant submits that the health care services by a clinical establishment, an authorized medical prac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... '). b) M/s. KIMS Healthcare Management Ltd. Advance Ruling No. KER 17/2018 Dt. 20.10.2018 = 2018 (11) TMI 281 - AUTHORITY FOR ADVANCE RULINGS, KERALA (Copy enclosed as 'Enclosure E') It is held in this decision that the supply of medicine, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment are naturally bundled and are provided in conjunction with each other, would be considered as "composite supply" and eligible for exemption under the category 'healthcare services'. 13. Further the Applicant is also of the view that the supply of medicines, implants, surgical items and allied items provided by the hospital through the hospital owned pharmacy to the out-patient is also part of supply of health care treatment and composite supply and hence exempted and so not taxable under CGST/SGST, being health care services." 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- "The Applicant M/s. Terna Public Charitable Trust runs a hospital at the address: Plot No 12 Sector 22, Nerul West, Navi Mumbai. The applicant is rendering medical services to the patients, as we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he applicant as well as the jurisdictional office. The applicant has submitted that they are running a hospital & Research Centre under the name and style 'Terna Specialty Hospital & Research Centre' at Navi Mumbai, PIN- 400706 and the said hospital owns and runs a pharmacy under the same Tin and are rendering medical services with professionals like doctors, nursing staff, lab technicians etc. mostly on charitable basis. They have further submitted that the Hospital is providing the following services 1) treating in-patients 2) treating out- patients, 3) Supplies medicines/goods from own pharmacy, to outside persons as per the prescription of outside Doctors. They have submitted that during the course of treating the in-house patients admitted in the hospital, medicines, surgical items, implants, consumables and allied items are provided by them to such patients. For proper care and watch by doctors/ nurses, a room on rent and food from Hospital Canteen, under the supervision of dietician is also provided to the in-house patients as a part of overall health care. Out-patients, (OPD patients) are also treated by the Hospital. These OPD patients buy medicines, surgical items ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. Thus, subject hospital is considered as a clinical establishment under the GST Laws and since it is providing health care services, such services are exempt in view of Sr. No. 74 mentioned above, The entire supply of services by the hospital, like supply of medicines, surgical items, implants, consumables and other allied items, treatment procedures, diagnostic procedures, supply of food to patients, room on rent to the in-patients is part of composite supply of health care treatment. We also agree with the applicant's contention that room rent for patients in hospital are exempted in lieu of Circular No. 27/01/2018-GST dt. 04/01/2018 and that the food supplied to the inpatients, as advised by the doctor/nutritionist, is a part of composite supply of health care and not separately taxable. Their reference to the clarifications issued based on the approval of 25th GST Council Meeting held on 18-01-2018 [F.No.354/17/2018-TRU Dt. 12-02-2018] is proper. We therefore have no doubt that the supply of medicines, surgical items, implants, consumables and other allied items pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e health services are rendered only till the point of prescription. In such a case the supply of medicines, surgical items, implants, consumables and other allied items, if purchased by the outpatient from the hospital pharmacy, provided by the hospital through the hospital owned pharmacy to the out-patients, will not be a part of composite supply of health care treatment; and hence will be taxable under CGST/SGST. The applicant themselves have submitted that the pharmacy can sell medicines to any person with a prescription. In the case of in-patients, the medicines are routed from the pharmacy to the patients through the nurses, doctors, etc. The patient does not separately buy the medicine. The hospital disburses the medicine as prescribed by the doctors directly to the patients by way of oral administration or injections, etc which is performed by the nurses on duty, doctors, etc. In the case of out-patients and direct walk-in customers the sale is direct i.e. from the pharmacy to the customers. This is comparable to the sale of medicines, etc by any other pharmacy situated outside hospitals who are liable to pay GST. In the case of out-patients the Hospital reserves no control ..... X X X X Extracts X X X X X X X X Extracts X X X X
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