TMI Blog2021 (3) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... dicines, consumables, implants, etc. to the In-patients in the course of treatment on the directions of medical doctor for which the In-patient is billed together by the hospital. The hospital cannot provide health services including diagnostic, treatment surgery etc. without the help of medicines to be taken during treatment, implants and consumables used during their stay in the hospital. Only on using these medicines, consumable and implants as required and prescribed by the doctors and administered during their stay will the treatment be complete. Hence, supply of medicines, implants and consumables are natural bundled with the supply of health services. In this case, supply of health services is the principal supply as that is the reason the in-patients get admitted to hospital instead of buying the medicines or consumables and using on themselves. Therefore, supply of medicines, consumables and implants to the In-patients in the course of their treatment is a composite supply of health services. The applicant s contention that room rent for patients in hospital is exempted in lieu of Circular No.27/01/2018-GST dated 04.01.2018 and the food supplied to the in-patients, as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SANJAY SAXENA AND MOHIT AGRAWAL MEMBER Present for the applicant : CA Dhruvank Parikh BRIEF FACTS: M/s Baroda Medicare Private Limited, Sunshine Global Hospital, 385/1, Plot No. 3, Manjalpur, Vadodars-390011, Gujarat(herein after referred to as the applicant for the sake of brevity)is running hospitals primarily under the brand name Sunshine Global Hospitals and was incorporated in 2007. The applicant is operating as a multi-specialty hospital having its registered office at Sunshine Global Hospital, Nr. ShreyasVidyalaya, Manjalpur, Vadodara - 390011 and having 2 other units at Vadodara and Surat, as detailed below: Manjalpur Hospital: Sunshine Global Hospital, Manjalpur unit was incorporated in 2009. This is the Flagship Hospital of the Group with strong brand equity particularly for Trauma care. This unit is having dedicated Cardiac Unit with State of Art Cath-Lab (Vascular Capabilities) with dedicated 10 Cardio ICU beds The unit is NABH Accredited Key Specialties of this unit: Cardiology, Orthopedics, Laparoscopy, Gynecology, Ophthalmology, General Surgery, General Medicine, Oncology, Neurology Critical Care ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trustworthy doctor patient relationship... and it has also put an end to long awaited quest for the multispecialty and tertiary centre in the area it which operates. Sunshine Global Hospital, has redefined the dimensions of healthcare services by providing comprehensive healthcare solution with compassionate care, innovative practices and patient centric services. It is a NABH accredited hospital providing quality care to the patients. The Hospital is committed to excellence quality and has an established focus on the well-being of its patients by providing the right mix of cutting edge technology, warm compassionate care, and the best medical professionals and procedures, in a cost effective way for offering the very best in private healthcare. They provide the highest standard of clinical skills and nursing care across an extensive range of specialties and attract world-class doctors and surgeons from the leading hospitals. The hospital offers a convenient location for patients and their visitors and is one of the fastest growing chains of multispecialty hospitals in South Gujarat. Delivering a wide-ranging array of medical services, we offer inpatient, ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f medicine by your Applicant and your Applicant have never treated the same under the ambit of health care services and accordingly the Applicant discharges GST on the said supplies of medicines and allied items when supplied from in house pharmacy to out-patients (OPD). An Invoice (Ref No. PM 2019-20/407631 dated 27th November, 2019) is also submitted. The Applicant doesn t have any doubt / confusion regarding the taxability of the said supplies. Presently the Applicant follows a practice wherein Patients are admitted to a hospital when they are ill or have severe physical trauma or require appropriate inpatient medical treatment. As far as, an inpatient (IPD) is concerned, the Applicant is expected to provide lodging, care, medical treatments, medicines food, other allied items services as a part of treatment under supervision till discharge from the hospital. Inpatients (IPD) receive medical facility as per the scheduled procedure and have strict restriction to ensure quantity / quality of items for consumption. The hospital owns and runs a pharmacy. During the course of treating the in-house patients admitted in the hospital medicines, surgical items, implants, cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsing medicine and consumables to the inpatients of the hospital. The Applicant submitted that the health care services by a clinical establishment, an authorized medical practitioner or Para-medicals have been exempted vide the Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017 at serial No.74 heading 9993. As per the definitions given under the said Notification 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. It is submission of the applicant that the health care services provided by a clinical establishment, an authorized medical practitioner or Para-medics are exempted vide Serial No.74 of Notification No.12/2017-Central Tax (Rate) dated 28th June, 2017. (Copy of Relevant portion of the notification is enclosed) Further, the Government of India vide Circular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma. The words diagnosis, and care are broad enough to cover the Occupational Health Check Up Facilities. Based on the above belief, the Applicant, requested to kindly answer the question in affirmative treating the entire transaction including pharmacy supplies to IPD patient as a composite one taking into consideration the belief of the Applicant based on legal propositions as presented above. 4. At the time of personal hearing held through Video Conferencing on 24.09.2020, the Authorised Representative of the applicant, CA Dhruvank Parikh reiterated the facts as stated in the application and as mentioned herein above and submitted additional submission as below: (i) They submitted the copy of invoices being prepared by the Applicant towards supply of Health Care services to the IPD Patients. (ii) Further with respect to the second question, the Applicant submitted that till date, no such agreements have been entered into but the same is the proposed activity of the Applicant and, hence, the applicant craves a leave for non - submission of any agreement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, and other allied medical services as and when required by the Organization towards their staff needs in the workplace and allow the employer to make changes to improve worker health and safety. clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised 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'. (ix) The back ground of the same is evident from the Finance Act, 1994 wherein vide Notification No.24/2010-STdated 22ndJune, 2010, service tax was made applicable vide Section 65(105)(zzzzo) of the Finance Act, 1994 by providing that Taxable service means any service provided or to be provided by any hospital, nursing home or multi-specialty clinic,- (i) to an employee of any business entity, in relation to health check-up or preventive care, where the payment for such check-up or preventive care is made by such bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Health Care Services. It is to bring to the notice of this authority that across the country none of the Hospitals or clinical establishments were paying Service Tax on the Corporate Health Check-ups offered by them during the service tax regime. (xiii) The conditions to claim exemption are as below on fulfilment of which the Applicant believes to get exemption from GST: i.) The services supplied must be 'Health Care Services' which holds true in case of the proposed activity of the Appellant, and ii.) The said Health Care Services must be supplied by either the Clinical Establishment or authorized medical practitioner or para-medics. Even this condition is being satisfied in the proposed activity as the Applicant is a Clinical Establishment who is going to carry out the impugned proposed activity. (xiv) Thus, Health care services are exempt from service tax for the period post negative list 01.07.2012. Health care services were selectively taxed for the period 01.07.2010 to 01.05.2011 and thereafter, health care services were exempt from service tax. Post negative list regime with effect from 01.07.2012, health care services rendered by clinical es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tems are provided by them such patients. For proper care and watch by doctors/nurses, a room on rent and food from Hospital Canteens, 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 Hospitals. These OPD patients buy medicines, surgical items, implants, consumables and other allied items for their use. 6.1 The Applicant has also submitted that the Occupational Health Check-up services (OHC) are also provided by the hospital i.e. nursing staff, Doctors, Paramedical staff on hospital s payroll working in different corporate for providing health check-up service along with ambulance facility, and allied medical services to their employees. They also conduct the camps for health check-up outside the hospitals. 7. In view of the above, they have raised two questions before this authority which are taken up one by one for discussion, as below:- Question No.1: Whether the supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through their hospital in house pharmacy, as well as food, room on rent, other services t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to hospital instead of buying the medicines or consumables and using on themselves. Therefore, supply of medicines, consumables and implants to the In-patients in the course of their treatment is a composite supply of health services. The term composite supply is defined in Section 2(30) of the CGST Act, 2017 reads as under:- composite supply means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. 7.3 This view is strengthened by the Circular No.32/06/2018-GST dated 12.02.2018 , which is reproduced below: Sr.No. Issue Clarification 5 Is GST leviable in following cases: (1) --------- (2) Retention money: Hospitals charge the patients, say, ₹ 10000/- and pay to the consultants/ technicians only ₹ 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , aimed at curing, restoring and/or maintaining the health of a patient. iii. psychiatric services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring and/or maintaining the health of a patient. iv. other hospital services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring and/or maintaining the health of a patient. These services comprise medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services, including radiological and anaesthesiological services, etc. Thus, Inpatient services means services provided by hospitals to inpatients under the direction of medical doctors aimed at curing, restoring and/or maintaining the health of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services. A complete gamut of activities required for well-being of a patient and provided by a hospital under the direction of medical doctors is a composite supply of service and is covered under Inpatient services classifiable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or care for illness, etc. are undertaken by such establishment under the directions of a medical doctor. The applicant hospital is a Clinical Establishment and for the health care services as defined in the Notification above provided including the supply of medicines, implants and consumables, rooms, food etc. they are exempt under Sl. No 74 of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017. 7.6 We also agree with the applicant s contention that room rent for patients in hospital is exempted in lieu of Circular No.27/01/2018-GST dated 04.01.2018 and the food supplied to the in-patients, 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 vide Circular No.32/06/2018-GST dated 12.02.2018 based on the approval of 25th GST Council Meeting held on 18-012018 [F.No.354/17/2018-TRU Dt.12-02-2018], is proper. The relevant text of the Circular No. 27/01/2018-GST dated 4.1.2018, which amply clarifies that room rent is exempted under Notn. No. 22/2017 CT(Rate), is reproduced under for ease of reference: S.No. Questions/Clarificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth check-up service along with ambulance facility, and allied medical services to their employees. They also conduct the camps for health check-up outside the hospitals. 11. Thus, we find that the Applicant s hospital is providing health services to employees of the business entities, in relation to Occupational Health Check-up (OHC) or preventive care along with ambulance facility, and allied medical services. Payment thereof is being made by such business entity directly to the applicant s hospital. In this case, service provider is the hospital of the applicant and the service receiver is the business entity, who have made payments directly to the applicant. 12. With the change in the style of functioning of the business organizations, health check-up is a routine facility provided by the employers to their employees. The main purpose is to ensure that the productivity of the organization is not adversely affected due to ill health of its employees. Such activities, commonly known as corporate health check-up schemes, are undertaken by designated hospitals in order to detect any medical indicator or to ensure timely diagnosis of any disease so that prophylactic measure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed accidents, trips, and falls, Physically demanding work, Heat and cold, etc. (ii) The best way to avoid any accident to happen is to have preventive safety processes in place get an individual's health check done regularly. ln many companies, it is becoming mandatory to have a Pre-employment health check-up done even before hiring an employee. (iii) Thus, occupational health checks can be required for variety of staff at various stages of their occupation, starting before a new person is assigned to particular job. These are generally used for the following purposes: a) to establish that candidates are able to meet the physical requirements of the job prior to assignment b) to prevent work related injuries, diseases and potential health hazards. c) to monitor health status at periodic intervals when the job involves occupational hazards and exposure such as toxins or other substances. d) to arrange immediate treatment as and when required which may involve getting ambulance services in case patient needs ICU or Ventilator or immediate hospital admission and other allied medical services. e) to establish that employees are able to retur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28.06.2017. 17. In light of the foregoing, we rule as under R U L I N G Question 1: Whether the supply of medicines, surgical items, implants, consumables and other allied services items provided by the hospital through their hospital in house pharmacy, as well as food, room on rent, other services to the in-patients is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? Answer : The supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through their hospital in house pharmacy used in the course of providing health care services as well as supply of food and room on rent to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply of In Patient Healthcare Service. Supply of inpatient health care services by the applicant hospital as defined in Para 2(zg) of the Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, as amended, is exempted from CGST as per Sl. No. 74 of the above notification. Question 2 : Whether the supply of Occupational Health Check-up service (OHC) by the hospital i.e. nursing staf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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