2018 (5) TMI 1704 - AAR - GST

Levy of GST on rent payable by a Hospital, catering life saving services - appellant have taken premises of one floor on rental basis from existing building of Mallige Hospital for heart Care Services only - Rental or leasing services involving own or leased non-residential property - purview /jurisdiction of authority under Section 97(2) (e) of the CGST Act 2017. Held that - The Applicant has taken the premises on lease and running exclusive heart care centre & providing health care services on commercial basis - The impugned service of Rental or leasing services involving own or leased non-residential property is classified under the heading (SAC) 997212 and is taxable under GST. Further no specific exemption is available under any notification for the time being in force for the said service. Also there is no provision available in the Act which allows exemption on an input service if the output service provided by the taxable person is exempt. Ruling - GST is leviable on the rent paid / payable for premises, taken on lease by the applicant.

Summary

Issues:
1. Whether GST is leviable on the rent payable by a Hospital providing life-saving services?

Analysis:
The case involved an application for advance ruling by a cardiology specialized hospital regarding the GST applicability on the rent paid for leasing premises. The hospital provided life-saving health care services and sought clarification on the GST liability concerning the rent. The applicant highlighted that during the service tax regime, the rent for room services provided to heart care patients was exempt. However, under the GST regime, the hospital services were exempt from GST, leading to a query about the exemption status of rent paid. The Authority considered the submissions made by the applicant and the relevant legal provisions to provide a ruling.

The Authority examined the definition of "renting in relation to immovable property" as per Notification No. 12/2017 - Central Tax (Rate), which includes allowing access or occupation of immovable property. The hospital had leased premises to run an exclusive heart care center, offering health care services commercially. The service of renting or leasing non-residential property falls under SAC 997212 and is taxable under GST. The ruling highlighted that there was no specific exemption available for this service, and no provision allowed exemption on input services if the output service was exempt. Based on these considerations, the Authority ruled that GST is leviable on the rent paid or payable for the leased premises by the hospital.

This judgment clarifies the GST liability on rent for hospitals providing life-saving services. It underscores the taxable nature of renting services involving non-residential property under GST, emphasizing the absence of exemptions for such services. The ruling aligns with the legal framework and provides guidance on the tax treatment of rent in similar scenarios, contributing to clarity in GST compliance for healthcare service providers leasing premises.