2020 (10) TMI 1300 - AAR - GST

Classification of services - services provided by LLP under PPP contract to UK Government Nodal Agency - applicability of serial no. 3, 73 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) on LLP - HELD THAT - The society had permitted the applicant to operate and maintain the healthcare facilities in the districts and to provide the healthcare services to the people of Uttarakhand. On perusal of Schedule-B of the contract, the applicant has to provide minimum healthcare services ( clinical curative services, Diagnostic other para clinical services, Ancillary services including ambulance services, laundry services, security services etc), commission, operate maintain website for healthcare facilities, infrastructure, personnel equipments requirement to meet the goal of the Govt i.e. to resolve enhance health infrastructure facilities to the remote population in the state of Uttarakhand. Whether other ancillary services viz laundry services, security services, commission, operate maintain of website for healthcare facilities etc infrastructure provided along with minimum healthcare services are taxable or otherwise? - HELD THAT - In the instant case other said ancillary services rendered along with infrastructure during the course of 'healthcare service' is covered under composite service in as much as the 'healthcare services' constitutes the predominant element and therefore becomes the principal supply and other ancillary services infrastructure shall form the part Of that composite supply as ancillary in as much as 'healthcare services' cannot be effectively accomplished without rendering other ancillary services infrastructures - the services provided in relation to 'healthcare services' are exempted from the liability to GST in as much as all such ancillary activities having a proximal nexus with 'healthcare services' and thus, shall covered under 'healthcare services'. All the healthcare services by a clinical establishment or authorized medical practitioner or para medics by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy and services by way of transportation of the patient to and from a clinical establishment are exempt from GST. However, hair transplant or cosmetic or plastic surgery does not get exemption and is taxed. Thus, all treatments excluding cosmetic treatments have been covered by this definition - the applicant is engaged in providing 'healthcare services' to the people of Uttarakhand and the same is classified under service code 9993. It is also found that the said services are exempted from payment of GST as provided vide entry no, 74 of Notification No. 12/2017-Central Tax (Rate) dated (as amended from time to time). Whether serial no. 3, 73 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) are applicable on LLP? - HELD THAT - The intra-state supply of services mentioned therein, are exempted from payment of GST subject to the relevant conditions as mentioned against the corresponding services. Thus, the said notification deals with exemption to the category of service rendered and not to the category of person engaged in supply of services. Accordingly it is observed that the supply of services, irrespective of person involved therein, mentioned in the said notification, are in exempted category.

Issues Involved:
1. Classification of the services provided by the applicant under the PPP contract to the Uttarakhand Government Nodal Agency.
2. Applicability of serial numbers 3, 73, and 74 of Notification No. 12/2017 dated 28.06.2017 (as amended) on the LLP.

Detailed Analysis:

(A) Classification of Service Provided by the Applicant to the Society:

A.1 Context and Scope:
The applicant is engaged in providing services to the Uttarakhand Health and Family Welfare Society, a nodal agency of the Uttarakhand Government, under a PPP contract. The contract involves the operation and maintenance of healthcare facilities and provision of healthcare services in Uttarakhand. The applicant's responsibilities include developing healthcare facilities, supplying medical equipment, providing manpower, and maintaining a comprehensive website for healthcare facilities.

A.2 Ancillary Services and Taxability:
The question arises whether ancillary services such as laundry, security, and website maintenance provided along with healthcare services are taxable. These ancillary services and infrastructure are considered support services to 'healthcare services' and are treated as incidental to the primary healthcare service. According to Section 2(30) of the Act, a "composite supply" includes multiple supplies naturally bundled and supplied together, with one being the principal supply. Section 2(90) defines "principal supply" as the predominant element of a composite supply. Section 8 states that tax liability on a composite supply is determined based on the principal supply.

In this case, the ancillary services are part of a composite supply with 'healthcare services' as the principal supply. Therefore, these ancillary services are covered under the composite supply of healthcare services and are exempt from GST.

A.3 Exemption of Healthcare Services:
Healthcare services provided by a clinical establishment, authorized medical practitioner, or paramedics are exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The definition of 'healthcare services' includes diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy, excluding cosmetic or plastic surgery unless medically necessary.

A.4 Conclusion on Classification:
The applicant's services are classified under service code 9993 as 'healthcare services' and are exempt from GST as per entry no. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

(B) Applicability of Notification No. 12/2017 on LLP:

B.1 Exemption Based on Service Category:
Notification No. 12/2017-Central Tax (Rate) exempts intra-state supply of specified services from GST, subject to conditions mentioned in the notification. The exemption applies to the category of service rendered, not the category of the person providing the service. Therefore, the supply of services mentioned in the notification is exempt regardless of the person involved.

B.2 Conclusion on Applicability:
The services provided by the applicant under 'healthcare services' fall under serial no. 74 of the notification and are exempt from GST. The notification applies to the services provided, irrespective of the LLP's involvement.

Order:
1. The services rendered by the applicant are classified under 'healthcare services' and fall under serial no. 74 of the table appended to Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 (as amended), classified under Service Code (Tariff) 9993.
2. Notification No. 12/2017-Central Tax (Rate) exempts the supply of services mentioned therein, irrespective of the person involved in providing the same.

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