2022 (6) TMI 34 - AAAR - GST

Exemption from CGST/SGST - Healthcare services provided to business entity - composite supply or not - supply of medicines, surgical items, implants, consumables and other allied services items provided by the hospital through their hospital in-house pharmacy, as well as food, room rent, other services to the in-patients - supply of Occupational Health Check-up (OHC) service by the hospital i.e. nursing staff, Doctors, Paramedical staff on hospital s payroll, working in different corporate for providing health check-up service, ambulance facility, and allied medical services to their employees and also the camps conducted for health check-up outside the hospitals - HELD THAT - It is clear that objective of medical examination is diagnosis. The definition of diagnosis, as per Cambridge dictionary means a judgement about what particular illness or problem is, made after examining and as per freedictionary.com is the act of process of identifying or determining the nature and cause of a disease or injury through evaluation of patient s history, examination and review of laboratory data, are broad enough to include occupational health check ups within the meaning of word diagnosis. Further, occupational health check-ups provide preventive care which falls in the scope of the word care - As per Entry at Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017 Health Care Services must be supplied by clinical establishment, an authorized medical practitioner or para-medics and these services are not limited to specified or particular conditions, diseases or anatomical reasons as well as these services can be provided in general practitioner s practices and also delivered by outpatient clinics, at home, in firms, schools etc or by phone, internet or other means. In view of definition of Health Care Services, it is clear that there is no disparity when provided by a clinical establishment to a patient inside the clinical establishment or outside the said establishment. The supply of Occupation Health Checkup Service by the hospital i.e. nursing staff, Doctors, Paramedical staff on hospital s payroll working in different corporate for providing health check-up services, ambulance facility and allied medical services to their employees and also the camps conducted for health check-up outside the hospitals to be treated as Health Care Service and exempted under GST in terms of Entry at Sr.No.74 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and Notification No. 12/2017-State Tax (Rate) dated 30.06.2017, as amended.

Summary

Issues Involved:
1. Taxability of supply of medicines, surgical items, implants, consumables, and other allied services provided by the hospital.
2. Taxability of Occupational Health Check-up (OHC) services provided by the hospital to corporate employees.

Detailed Analysis:

Issue 1: Taxability of Supply of Medicines, Surgical Items, and Other Allied Services
The GAAR ruled that the supply of medicines, surgical items, implants, consumables, and other allied items provided by the hospital through their in-house pharmacy, as well as food and room rent to in-patients, is part of a composite supply of In-Patient Healthcare Service. This supply is exempt from CGST and SGST as per Para 2(zg) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, under Sl. No. 74.

Issue 2: Taxability of Occupational Health Check-up (OHC) Services
The appellant, M/s. Baroda Medicare Private Limited, contested GAAR's ruling that OHC services provided to corporate employees are taxable at 18% under "Human health and social care services" (S. No. 31 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017).

Appellant’s Arguments:
1. Nature of Services: The appellant argued that OHC services, which include regular health check-ups, preventive care, and emergency medical services provided by clinical staff, are essentially preventive medicine and should be classified under "Health Care Services."
2. Exemption Eligibility: The appellant referred to Service Code 999312, which includes general medical services such as consultations and physical check-ups, indicating that these services are not limited to specific conditions and can be provided in various settings, including firms.
3. Previous Tax Regimes: The appellant cited the exemption of similar services under the Service Tax regime, arguing that the definition of "Health Care Services" under GST is similar to that under the Finance Act, 1994.

Appellate Authority’s Findings:
1. Definition of Health Care Services: The Authority noted that "Health Care Services" include any service by way of diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicines in India. This also includes services by way of transportation of the patient to and from a clinical establishment.
2. Scope of OHC Services: The Authority observed that OHC services provided by the appellant, including round-the-clock availability of medical staff for treatment, diagnosis, and allied healthcare services at the corporate site, fall within the scope of "Health Care Services."
3. Service Classification: The Authority found that GAAR erred in classifying OHC services under "Human Health and Social Care Services" and not recognizing them as "Health Care Services." The services provided by the appellant are covered under Service Code 999312, which is broad enough to include general medical services provided in various settings.

Conclusion:
The Appellate Authority modified the GAAR ruling, holding that the supply of OHC services by the hospital, including nursing staff, doctors, paramedical staff, ambulance facility, and allied medical services to corporate employees, should be treated as "Health Care Services." These services are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Final Judgment:
The supply of Occupational Health Check-up services by the hospital to corporate employees is classified as "Health Care Services" and is exempt from GST under the relevant notifications. The ruling of GAAR in respect of Question No. 2 is set aside.