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TMI Blog2024 (1) TMI 1420X X X X Extracts X X X X X X X X Extracts X X X X ..... icant states that they are engaged in providing health care services by running a hospital. The applicant states that they are providing treatment to in-patients suffering from psychic disorder, substance use disorder, Neurology etc. 3. The applicant has sought advance ruling in respect of the following questions: i. Whether the supply of medicines, drugs and consumables used in the course of providing health care services to in-patients during the course of diagnosis and treatment during the patients admission in hospital would be considered as "Composite Supply" qualifying for exemption under the category of "health care services" as per Services Exempt Notification No. 12/2017-Central Tax (Rate) dated: 28-06-2017 read with Section 8(a) of the CGST Act, 2017/ KGST Act, 2017? ii. Whether the supply of food to in-patients would be considered as "Composite Supply" of health care services under CGST Act, 2017 & KGST Act, 2017 and consequently, can exemption under Services Exempt Notification No. 12/2017-Central Tax (Rate) dated: 28-06-2017 read with Section 8(a) of GST be claimed? iii. Whether GST is applicable on money retained by the applicant? iv. Whether GST is exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eurology and other specialties. They provide treatment to in-patients who suffer from mental disorder that affects a person's brain and behaviour leading to person's inability to control their use of substance such as legal or illegal drugs, alcohol or medications. Symptoms range from moderate to severe with addiction being the most severe form of substance use disorder. Applicant provides psychiatric services under the supervision of specialised Medical Doctors to in-patients aimed at curing, rehabilitating, restoring and / or maintaining the health of in-patients. 2) Patients undergo a counselling session with qualified psychiatrist. Further, parameters such as sexual history, drug addiction, source of drug etc are assessed and patients are motivated to discontinue drugs. Applicant strives to cure illness caused by mental disorder and rehabilitate patients. 3) (i) A routine check-up is conducted by the psychiatrist wherein blood pressure and pulse rate of the patient is examined. Further, if required other test such as blood test, ultrasound etc. are suggested for further diagnosis to identify the nature of illness. (ii) Where the out patients and in-patients hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 8 deals with tax liability on composite and mixed supplies:- The tax liability on a composite or a mixed supply shall be determined in the following manner, namely (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more supplies shall be treated as a supply of that particular supply which attracts the highest rate of tax. 6. The entry at sl.no. 74 of Services Exempt Notification No. 12/2017 Central Tax (Rate) dated: 28-06-2017 reads as follows: Sl. No. Chapter Description of Services Rate Condition 74 Heading 9993 Services by way of: (a) healthcare services by a clinical establishment, an authorized medical practitioner or paramedics: (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. Nil Nil (iv). The term "healthcare services" is defined in Para 2 (zg) of Services Exempt Notification No.12/2017 Central Tax (Rate) dated 28.06.2017 as follows; "healthcare services" means any service by way of diagnosis or treatment or care for illness, injury, deformit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of a patient and the service comprises of medical, pharmaceutical and paramedical services, rehabilitation services, nursing services and laboratory and technical services. (vii) primary purpose of the hospital is to provide treatment to the patients approaching them. The basic Intention of the patients visiting the hospital is to get treatment for their ailment mainly mental disorder. Depending upon the severity of the illness the patient may require immediate medical attention, continuous monitoring etc. Therefore, according to their health condition they will be admitted in hospital as inpatient. The patients admitted to a hospital are treated with proper diagnosis of the disease / illness and treatment including appropriate medicines, surgical procedures if necessary, consumables required along with proper diet is administered to them in the most efficient manner so that they can regain their health within the shortest possible time and resume their activities. Therefore, the medicines, consumables and foods supplied in the course of providing treatment to the patients admitted in the hospital is an integral part of the health care service extended to the patients. Hence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per entry at Sl. No. 74 of Services Exempt Notification No. 12/2017 Central Tax (Rate), dated 28-6-2017" (ii) That in case of St. Thomas Hospital reported in 2021(52)GSTL474 (AAR-GST-Ker) on similar set of facts it was held by the AAR Authority as follows: Healthcare services to inpatients - Composite Supply - Supply of medicines, surgical items, implants, stents and other consumables to inpatients - HELD: Assessees clinical establishment as defined in Para 2(s) of Services Exempt Notification No. 12/2017- C-T. (Rate) dated: 28-06-2017 Medicines, implants and consumables supplied in course of providing treatment to patients admitted in hospital, integral part of healthcare service extended to patient. Hence, supplies made in course of providing treatment to patients admitted in hospital undoubtedly naturally bundled in ordinary course of business - Principal supply i.e. healthcare service is predominant element of composite supply and other supplies such as room, medicines, implants, consumables and incidental or ancillary to predominant supply. These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation services, nursing services and laboratory and technical services. The 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 'In-patient services' classifiable under SCS 999311. From a joint reading of the explanatory notes pertaining to in-patient services and the exemption stated 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. Further the CBIC in Circular No.32/06/2018 - GST dated 12.02.2018 clarified that food supplied to the inpatients as advised by the doctor / nutritionist is a part of composite supply of healthcare and not separately taxable. (ii) As per Sl. No. 74 of Services Exempt Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 health care service has been exempted from payment of GST. The healthcare services will be the predominant element of this composite supply whereas medicines, surgical items, implants, stents and other cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tals charge the patients, say, Rs. 10000/- and pay to the consultants/ technicians only Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood Pressure etc. Will GST be applicable on such money retained by the hospitals? Healthcare services have been defined to mean any service 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. Thus applicant's understanding is entire amount charged as retention money from the patient for payment to doctors and technicians towards health care service provided by the hospital is exempt from tax. 6.4 With regard to Question No. D. i. The applicant submits that they provide practical train ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at they are engaged in providing health care services to patients suffering from psychic disorder, substance use disorder, Neurology etc. The Applicant has sought advance ruling in respect of questions mentioned in para 3 supra. We proceed to consider one question at a time. First question is 'Whether the supply of medicines, drugs and consumables used in the course of providing health care services to in-patients would be considered as "Composite Supply" qualifying for exemption under the category of "health care services" as per Services Exempt Notification No. 12/2017-Central Tax (Rate) dated: 28-06-2017. 11. In this regard relevant entry of Notification No. 12/2017-Central Tax (Rate) dated: 28.06.2017 is reproduced hereunder: Sl. No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent) Condition 74 Heading 9993 Services by way of- (a) health care services by a clinical establishment, an authorised medical practitioner or para-medics clinical Provided that nothing in this entry shall apply to the services provided by a establishment by way of providing room [other than Intensive Care Unit (ICU)/Critical Care Unit (CCU)/In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; Tax liability on the composite supply is determined as mentioned in Section 8(a) of CGST Act 2017 as below: Section 8. Tax liability on composite and mixed supplies.- The tax liability on a composite or a mixed supply shall be determined in the following manner, namely:- (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; Principal Supply' is defined in subsection (90) of section 2 of CGST Act 2017 as below: (90) "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; 13.1 The primary purpose of the hospital is to provide treatment to the patients approaching and the intention of the patients visiting the hospital is to get treatment for their ailment. Depending upon the sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ras. Now we proceed to answer the third question i.e., Retention money: Whether GST is applicable on money retained by the applicant? Applicant states that Retention money is the amount deducted by the hospitals out of the amount collected by the patients while making payment to the consultant doctors or technicians who has been invited by the hospital for diagnosing and treating the patient. Para 5(2) of Circular No. 32/06/2018-GST dated: 12-02-20218 clarifies about levying GST on retention money and the same is reproduced below: Sl. No. Issues Clarification 5. 2) Is GST leviable in following cases: Retention Money: Hospitals charge the patients, say, Rs. 10000/- and pay to the consultants/ technicians only Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure etc. Will GST be applicable on such money retained healthcare services provided by the by the hospitals? 2) Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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