TMI Blog2020 (10) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... ain 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / restriction of input tax credit. Further the applicant have sought advance ruling in respect of the questions on the issues covered under Section 97(2)(d) of the CGST Act 2017 respectively and hence the application is admitted. 5. Applicant's interpretation of law : The Applicant submits their interpretation of law as under: 5.1 The applicant, with regard to the question 1 relating to whether input tax credit is required to be restricted on medicines supplied to patients admitted in hospital, submits that as per section 9 of KGST / CGST Acts, 2017, tax shall be levied on all intra-State supply of goods or services or both at the rates prescribed under the respective schedules and notifications. Notification No.12/2017 dated 28.06.2017 exempts health care services provided by a clinical establishment. As per this notification, the definition of clinical establishment includes hospital. The applicant further submits that health care services is also defined to mean any services by way of diagnosis or treatment or care or illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act, reads as where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies . 5.7 From the above submission, the applicant is of the understanding that, medicines supplied to patient admitted in hospital during the course of treatment forms part of health care services, which is exempt from payment of tax, therefore input tax paid on such medicines is not eligible for credit. 6. With regard to question 2 which is related to whether or not input tax credit is required to be restricted on medicines supplied to patients treated as outpatients, the applicant submits as under: 6.1 that the medicines supplied to patients treated as out-patients, do not form part of composite supply , as the patients have the option either to buy medicines at pharmacy runs by the applicant at hospital or in any other pharmacy outside the hospit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered the submissions made by the Applicant in his application for advance ruling as well as the submissions made by him when he appeared for the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 10.2 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the KGST Act. 10.3 The applicant is running a hospital providing health care services, to both in-patients as well as out-patients. The applicant, in addition to health care services also provides food beverages, medicines to the in-patients. The applicant has been making item-wise billing to the in-patients the out-patients. Thus the applicant supplies medicines to three types of persons, (a) inpatients, (b) out-patients and (c) customers. 10.4 In view of the above, the applicant is seeking advance in respect of the questions mentioned at para 3 supra. The questions are related to avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itute a composite supply the supply should consist of two or more taxable supplies which are naturally bundled and supplied in conjunction with each other. In the instant case the supply of medicines is not a distinct supply and the medicines are consumed in the course of supply of treatment services and hence would not constitute a composite supply as there is only one supply and that is treatment of ailment which is a health care service . If at all any medicines or any other things are supplied independently, of the treatment services, then that would constitute a separate supply not under the service contract for which the person is admitted to the hospital. To constitute a composite supply, there must be two separate taxable supplies and these must be naturally bundled and supplied together. In the case of usage of medicines, there are no two supplies which are separate and bundled together and hence would not constitute composite supply . 10.8 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is a part of the health care services or not. If the supply of food beverages is under the prescribed diet as part of the treatment process, and if it is an integral part of the treatment, then the food and beverages loses its identity as a separate supply and merges with the supply of treatment service similar to supply of medicines. Thus the impugned supply of food beverages is an ancillary to the supply of treatment service i.e. health care service, which is an exempted supply, under entry No.74 of Notification No.12/2017- Central Tax (Rate) dated 28.06.2017. Therefore the applicant can't claim the input tax credit. 10.13 However, if the supply of food beverages is at the request of the patient i.e. if it is not a diet but menu is as per the patient's request, such supply maintain separate identity and if it is supplied distinctly, then the question arises whether the supply of food and beverages are naturally bundled and supplied in conjunction with the treatment or health care services. 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 out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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