TaxTMI 
TaxTMI 
2022 (7) TMI 403
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....ith GSTIN 33AAECB5775C1ZW.The applicant has sought Advance Ruling on the following questions: 1. Whether the Supply medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Be well hospitals for diagnosis or treatment during the patients admission in hospital would be considered as "Composite Supply" of health care service as under GST and consequently avail exemption under Notification No.12/2017-CT (Rate) read with Section 8(a) of GST? 2. Whether the supply of medicines and consumables used In the course of providing health care services to out-patients by pharmacy unit of the Be well hospitals for diagnosis or treatment would be considered as "Composite Supply" of heath care services under GST and consequently avail exemption under Notification 12/2017 CT (rate) read with Section 8(a) of GST? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that they are a chain of multispecialty hospitals providing he....
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....ialised emergency care services provided by Applicant includes: Multiple fracture injuries, Burns, Poisoning, Snake bites. ii. Preventive Health care: Performing regular health check ensures a happier life for the individuals. Support in early detection of worrying changes if any at all, and addressing them with quick interventions. The Applicant has states that they have a range of health check programs right from the basic to the advanced and also have specialised ones for women and geriatric people. Health Checks Diagnostic tests related to health checks Basic Health Check up Blood Group, ECG, X-ray Master Health Check up Blood group, KFT, Lipid profile LFT, ECG, X-ray. USG Abdomen Cardiac Health Check up BKFT, Lipid profile, Na K+, ECHO, X-ray. HbA1C Women Health Check up Blood group, KFT, LFT Lipid profile, ECG, X-ray, TSI smear, USG Abdomen Diabetic Health Check up KFT, Lipid profile ACR, HbA1C Microalbuminuria Senior citizen Health Check up Blood group, KFT, lipid profile LFT, ECG, X-ray, Abdomen, Urinary incontinence screening test. iii. Multispecialty Care: The Applicant has stated that they render various multispeciality health care service in....
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....ion of time between in-patient and out-patient services. Since medicines and other allied items supplied to in-patient forms part of composite supply of health care services, accordingly similar supply of medicines and other allied items supplied to out-patients shall also constitute a composite imply. The applicant has stated that there is no clear distinction between in-patients and out-patients in GST law for the purpose of levy, since the nature of supplies service providers are same in case of both inpatients and out-patients there should not be any differences for the purpose of levy of GST based on duration of stay of the patients in clinical establishments. Further, it is also pertinent to mention that the definition of health care service as well as clinical establishment under Notification No. 12/2017 CT (Rate) dated 28.06.2017 issued under CGST Act, 2017 do not impose any specific restriction or condition to grant GST exemption only for IP patients. They have submitted that out patients do not buy medicines voluntarily without prescriptions. It is being purchased as part of the advice from doctor to get themselves cured from illness. Hence, it is a clear case of composit....
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....ot for the purpose of altering the nature of the supply, findings in relation to composite supply must take into account supplies effected at a given point in time on "as is where is basis". * TamilNadu Advance Ruling Authority in M/s Royal Care Speciality Hospital Ltd it was held that - "Medicines, Consumables and implants used in the course of providing healthcare to inpatients by the applicant is a composite supply of inpatient services classifiable under SAC 999311" 2.5 The applicant has also submitted that the supplies of medicines and consumables used in the course of providing health care services to out-patients by pharmacy unit is a composite supply of health care services. The applicant has made references to the definition of Healthcare services, clinical establishment under the Notification 12/2017. The applicant has also placed reference on the definition of composite supply and mixed supply under the GST Act. The applicant has compared the supplies made by them with definition of composite supply as below to ascertain whether the said supplies would qualify as composite supplies in the table below: Sl.No. Conditions of composite supply Healthcare services render....
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....ng questions: i. whether the pharmacy is only for in/out patients of the hospital or is it open to General public as well. The AR replied that it is open to general public too. ii. whether separate accounting/stock is maintained with respect of in patients and out patients. The AR replied that its all mixed up and no separate stocks are maintained. The State Member asked the AR whether it is mandatory for the out patients to buy from in house pharmacy. The AR replied that it is not mandatory. The applicant was asked to submit the following documents: 1. Flowchart showing full sequence of admissions, diagnosis, treatments and discharge along with the billing for same for a sample in patient 2. Documents supporting the full sequence of treatment extended to the out-patients along with supporting billing. 3. Modus of operation of pharmacy- whether separate accounting/stock is maintained with respect of in patients and out patients. 4. Trial balance and statement of accounts for the hospital and pharmacy. 5. Present practice followed with supporting bills/invoices. 3.2 In furtherance to the hearing held on 19.01.2022, the applicant submitted the following documents....
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....documentary evidences. Hence, the applicant was required vide letter dt.19.04.2022 to furnish 1. Bills raised by in-house pharmacy in respect of Medicines along with the consolidated bill raised on in-patient; 2. Bills raised by in-house Pharmacy for consumables used by in-patients supporting with the consolidated bill raised on the in-patient; and 3. Bills raised by in-house pharmacy on out-patient who avail consultation (registered with the clinic establishment as OP) 4. Details of the current practice followed as to whether the supplies are considered as composite supply or otherwise and the rate of GST at which the Patients (both in-patient and out- patient) are charged. 3.4. In response the applicant vide their letter dt.25.04.2022, submitted the relevant bills and submitted that they have one common pharmacy at each location to cater to both In-patients and Out-patients; that out patients are charged GST as per the item category as mentioned in supplier's invoice which are currently treated as separate supply; that as the Principal place of business located at New No.2, Old no.5, Vijayaraghava Road, First Street, T.Nagar, Chennai is their corporate office and no ....
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....ents, it has been stated that CBIC vide Circular no.32/06/2018-GST dt. 12.02.2018 has clarified that 'other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. Therefore, medicines and consumables used in the course of 'health care services' to out-patients are not eligible to avail exemption under Notification no.12/2017 read with Section8(a) of the GST Act. 5. The State jurisdictional authority has stated that no proceedings are pending relating to the applicant. 6. We have carefully examined the submissions of the applicant in their application, their oral and written submissions during the Personal Hearing, their further submissions after the PH and the submissions of the centre and State Jurisdictional Officer. The questions on which advance ruling is requested are as follows: 1. Whether the Supply medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Be well hospitals for diagnosis or treatment during the patients admission in hospital would be considered as "Composite Supply" of health care service as under GST and consequently avail exemption under....
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..... Doctors may prescribe some sample blood test, scans etc., to investigate the illness in detail. The patients can purchase the medicines prescribed by the Doctors at the hospital pharmacy or from any other outside pharmacy of their choice. Out patients are charged GST as per the item category as mentioned in their supplier invoice. They are currently treated as separate supply. 7.2 The health care services rendered to In-patients is first taken up for discussion. On perusal of documents submitted by the applicant, it is observed that in-patients are provided with stay facilities, medicines, consumables and other surgeries/procedures required for the treatment. From the In-patient final bill and related bills furnished by the applicant, it is seen that, in case of In-patients the final bill charged includes Consumables, Consultation charges, Lab profile test, Lab profile charges, Serology charges, Procedures, Medical records, Registration charges, Bio-chemistry charges, Hospital Services such as Room rent, OT charges and Pharmacy charges From the pharmacy bill for In-Patients enclosed with the detailed bill, it is evident that the medicines, consumables, etc are procured from IP p....
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.... by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India [para 2(zg) of notification No. 12/2017-CT(Rate)]. Therefore, hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/ payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt 7.5 The 'Explanation to classification of services' states: SAC 9993 Human Health and social care services 99931- Covers 'Human Health Services' 999311 Inpatient services This service code includes: i. surgical services delivered under the direction of medical doctors to inpatients, aimed at curing, restoring and/or maintaining the health of a patient ii. gynaecological and obstetrical services delivered under the direction of medical doctors to inpatients, 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....
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....rmality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; From a joint reading of the 'Explanation of service' pertaining to 'Inpatient services' and the exemption above, it is evident that the exemption is applicable to a "Clinical Establishment", when services by way of diagnosis or treatment 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 provided as defined in the Notification above provided to inpatients from admission till discharge including the supply of medicines, implants and consumables, they are exempt under S1 No 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and Si No 74 of Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017.....
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....n Hospital UH ID no.TUT-34605 TUT-Sal 036236/ 08.04.2022. Bill raised by pharmacy at No.5A, Vijayaraghava road, T. Nagar, Chennai. UH ID no.TUT-34605 2 Marieshwaran TUT-OPB-CA- 023443/08.04.2022 Tuticorin. Medicine has been prescribed at Tuticorin Hospital UH ID no.TUT-32347 TUT-Sal 036234/ 08.04.2022. Bill raised by pharmacy at No.5A, Vijayaraghava road, T. Nagar, Chennai. UH ID no.TUT-32347 8.3 In the case of in-patients, the hospital is expected to provide provide lodging, care, medicine and food as part of treatment under supervision till discharge from the hospital. But in the case of out-patients, there is no such expectation on the hospital and the out-patient just walks in for consultation and advise. Hence it is clear that the service of supply of medicines and consumables and consultation of out-patients is not inextricably linked and not naturally bundled. Therefore pharmacy run by hospital dispensing medicine to outpatient or bye standers or others can be treated as individual supply of medicine and not covered under the ambit of health care services. Hence such supply of medicines and allied goods are taxable. Further clarifications issued based on the approval o....