2021 (11) TMI 396 - AAR - GST

Educational Institution or not - Charitable Society having the main object and factually engaged in imparting Medical Education - fees and other charges received from students and recoupment charges received from patients (who is an essential clinical material for education laboratory) would constitute as outward supply or not - cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations - nominal charges received from patients (who is an essential clinical materials for education laboratory) towards an Unparallel Health Insurance Scheme - nominal amount received for making space available for essential facilities needed by the students and staffs such as Banking Parking and Refreshment which are support activities for attainment of main activities. Whether the applicant a Charitable Society having the main object and factually engaged in imparting Medical Education satisfying all the criteria of Educational Institution can be said to be engaged in the business so as to cast an obligation upon it to comply with the provisions of Central Goods and Service Tax Act 2017 and Maharashtra Goods and Service Tax Act 2017 in totality? - HELD THAT - The activities of the applicant which includes medical education services are covered under the scope of the term business . In fact Education Services are classified under Service and Accounting Code (SAC) 9992 and considered to be a supply of services. Since the applicant s supply of medical education services are also considered to be business there is definitely an obligation cast upon it to comply with the provisions of CGST Act 2017 and the MGST Act 2017 - with only respect to the medical education services as is asked in the Question the applicant may not comply with the provisions of CGST Act 2017 and the MGST Act 2017 since the applicant being an educational institution is providing medical education services as a part of a curriculum for obtaining a qualification recognized by any law (in this case the qualification is recognized by the Nagpur University) for the time being in force the said supply would be exempt under the GST Laws (Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Whether the applicant a Charitable Society having the main object and factually engaged in imparting Medical Education satisfying all the criteria of Educational Institution is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act 2017 and Maharashtra Goods and Service Tax Act 2017 or it can remain outside the preview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply? - HELD THAT - If the impugned supply of service by way of medical education made by the applicant are the only supplies undertaken by the applicant in such a case the applicant is not required to obtain registration under GST law since the impugned supply is held to be exempt cited supra. However if the applicant is undertaking or proposes to undertake any taxable supply of goods or services or both (other than described above) (such as renting of property restaurant service or provision of any other taxable service) then in such a scenario the applicant will be required to obtain GST registration under Section 22 of the GST Act. Since the applicant is also effecting certain taxable supplies (it is an admitted fact) as discussed in Question No. (iii) and since turnover exceeds the threshold limit the applicant is liable for registration. Whether the fees and other charges received from students and recoupment charges received from patients would constitute as outward supply as defined in section 2 (83) of the CGST Act 2017 and MGST Act 2017 and if yes then whether it will fall in classification entry at Sr. No 66 or the portion of nominal amount received from patients at Sr. No. 74 in terms of Notification 12/2017 C.T.-dt. 28/6/2017? - HELD THAT - It is noticed that the first part of the question is whether the fees and other charges received from students and recoupment charges received from patients would constitute as outward supply as defined in section 2 (83) of the CGST Act 2017 and MGST Act 2017 - the fees and other charges received from students and recoupment charges received from patients would not constitute as outward supply as defined in section 2 (83) of the CGST Act 2017 and MGST Act 2017 rather the fees /other charges would at the most constitute as consideration received against supply taxable or non-taxable. Hence we do not discuss the classification entry of such fees and other charges received. The charges recovered from OPD patients are exempt from tax - it is noticed than the applicant has asked Whether the nominal charges received from patients (who is an essential clinical materials for education laboratory) towards an Unparallel Health Insurance Scheme to retain their flow at one end for the purpose of imparting medical education as a result to provide them the benefit of concessional rates for investigations and treatment at other end would fall within the meaning of supply eligible for exemption under the category of educational and/or health care services . It is admitted fact that the applicant provides renting and other services as discussed in this question and collects certain amounts towards provision of said services. What is the object of provision of said service would not alter the basic nature of provision of any service. Each service or group of services provided has to be looked into separately with regard to schedule entries as per the scheme of the act - The service of supply of food to non-in-house-patients and those who are not employees of the hospital will be taxable as restaurant service at 5% (without ITC) provided the conditions of said schedule entry are fulfilled (entry no.7 of notification no 13/2018 dated 26/7/2018. The applicant did not provide any details regarding what sort of canteen restaurant or mess they are running. The said service provided to staff and employees as well as to in-house-patients is only exempt service. Whether the cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations other investigation such as CT-Scan MRI Colour Doppler Angiography Gastroscopy Sonography during the course of diagnosis and treatment of disease would fall within the meaning of composite supply qualifying for exemption under the category of educational and/or health care services? - HELD THAT - The charges recovered from OPD patients are exempt from tax. Whether the nominal charges received from patients (who is an essential clinical materials for education laboratory) towards an Unparallel Health Insurance Scheme to retain their flow at one end for the purpose of imparting medical education as a result to provide them the benefit of concessional rates for investigations and treatment at other end would fall within the meaning of supply eligible for exemption under the category of educational and/or health care services. ? - HELD THAT - It is admitted fact that the applicant provides a sort of medical insurance service and collects very small amounts towards premium what is the object of provision of said service would not alter the nature of provision of any service Each service or group of services provided has to be looked into separately with regard to schedule entries as per the scheme of the act. The applicant is not holding license from Insurance Regulator to provide the insurance service. So said service would not get covered by the scope of insurance service. Whether the nominal amount received for making space available for essential facilities needed by the students and staffs such as Banking Parking and Refreshment which are support activities for attainment of main activities and further amount received on account of disposal of wastage would fall within the meaning of supply qualifying for exemption under the category of educational and/or health care services? - HELD THAT - The receipt on account of rent is taxable at 18% as discussed above. It is further clarified that the food supplied to the in-patients as advised by the doctor/nutritionists as well as supply to employees and staff of the applicant; from such canteen is a part of composite supply of healthcare and is not taxable. But the other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable at 5%.

Summary

Issues Involved:
1. Whether the applicant, a Charitable Society engaged in imparting Medical Education, is engaged in business under the CGST Act, 2017 and MGST Act, 2017.
2. Whether the applicant is liable for registration under Section 22 of the CGST Act, 2017 and MGST Act, 2017 or can remain outside the purview of registration under Section 23.
3. Whether fees and charges received from students and patients constitute "outward supply" and their classification under Notification 12/2017.
4. Whether the cost of medicines and consumables recovered from OPD patients qualifies as "composite supply" for exemption under healthcare services.
5. Whether nominal charges received from patients for an "Unparallel Health Insurance Scheme" qualify for exemption under educational and/or healthcare services.
6. Whether nominal amounts received for making space available for essential facilities and disposal of wastage qualify for exemption under educational and/or healthcare services.

Detailed Analysis:

Issue 1: Engagement in Business
The applicant, a Charitable Society engaged in imparting Medical Education, is considered to be engaged in business under the CGST Act, 2017 and MGST Act, 2017. The definition of "business" under Section 2(17) includes activities without pecuniary benefit, covering medical education as a profession. Therefore, the applicant's activities are covered under the scope of "business."

Issue 2: Liability for Registration
The applicant is liable for registration under Section 22 of the CGST Act, 2017 and MGST Act, 2017. The applicant's supply of medical education services is exempt under Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. However, if the applicant undertakes taxable supplies (e.g., renting of property, restaurant service), they must obtain GST registration.

Issue 3: Fees and Charges as "Outward Supply"
The fees and other charges received from students and recoupment charges from patients do not constitute "outward supply" under Section 2(83) of the CGST Act, 2017 and MGST Act, 2017. These fees are considered "consideration" for the supply of services. The fees from recognized courses are exempt under Sr. No. 66, and recoupment charges from patients are exempt under Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate).

Issue 4: Composite Supply for Exemption
The cost of medicines and consumables recovered from OPD patients, along with charges for diagnostic services, qualifies as "composite supply" under healthcare services and is exempt from tax under Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate).

Issue 5: Health Insurance Scheme
The nominal charges received from patients for an "Unparallel Health Insurance Scheme" are taxable at 18% under the residuary entry. The applicant does not hold a license from the Insurance Regulator, so the service is not covered under insurance services but under "other services" (Heading 9997).

Issue 6: Essential Facilities and Disposal of Wastage
Nominal amounts received for making space available for essential facilities (e.g., Banking, Parking, Refreshment) are taxable at 18% under real estate services (Heading 9972). Food supplied to in-patients and staff is part of composite healthcare supply and is not taxable, but food supplied to non-admitted patients or visitors is taxable at 5%. The disposal of wastage was not specified, so this part was not answered.

Conclusion:
The applicant is engaged in business and is liable for registration. Fees and charges from students and patients are exempt from tax, while charges for the health insurance scheme and renting space are taxable. Essential facilities provided to in-patients and staff are exempt, but other supplies are taxable.