2019 (4) TMI 303 - AAR - GST

Clinical Establishment or not - Healthcare company - activity of diagnosis pre and post counselling therapy and prevention of diseases by providing necessary sophisticated tests - Sr.No.74 of N/N. 12/2017 - Central Tax (Rate) dated 28.06.2017 - Held that - The applicant has categorically mentioned that they have collaboration with companies, which in turn are accredited by NABL and DSIR. The Applicant is has neither come forward with the names of such companies with which the Applicant claims to have collaboration, nor have the Applicant produced any document evidencing their own status of accreditation by NABL, which obviously is the sole accreditation body for testing and calibration laboratories. In absence of anything brought on record by the Applicant, we are compelled to believe that the Applicant is making a vain attempt to circumvent the essential condition for qualification of Clinical Establishment. Needless to say that irrespective of the work being undertaken by the Applicant, there is no evidence before us even to indicate that the Applicant is a Clinical Establishment. Mere involvement in sophisticated testing and providing consultancy would not be a sufficient criterion, though necessary, for qualifying as a Clinical Establishment per se. The exemption for which the instant Application has been filed is Service Specific as well as Service Provider Specific. Thus to qualify for the said exemption an establishment has to satisfy dual conditions of providing Healthcare Service as well as being a Clinical Establishment. Thus while the service provided by the Applicant may be Healthcare Service, they do not qualify to be a Clinical Establishment The Applicant has failed to prove their legal status as Clinical Establishment and they are merely working as ancillary or sub-contractors to other accredited companies, and accordingly the Applicant are not entitled to avail exemption under Notification no. 12/2017-CT(Rate) and corresponding notification issued under MPGST Act.

Summary

Issues Involved:
1. Applicability of exemption under Sr.No.74 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.
2. Qualification of the applicant as a "Clinical Establishment" under clause 2(s) of the said Notification.

Detailed Analysis:

1. Applicability of Exemption under Sr.No.74 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017:

The applicant, a healthcare company, sought clarification on whether the exemption provided under Sr.No.74 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 is applicable to them. The notification provides exemption for services provided by way of healthcare services by a clinical establishment, an authorized medical practitioner, or para-medics.

The department's viewpoint highlighted that the applicant did not provide clear evidence of direct collaboration with NABL and DSIR accredited agencies, nor did they submit any documentary evidence to support their claim. The department opined that the applicant's services do not clearly fall under the parameters of healthcare services by a clinical establishment, suggesting a subcontracting arrangement with diagnostic companies.

During the personal hearing, the applicant reiterated their services in genetic testing, prevention, management, and precision diagnostics for diseases like cancer. They argued that their services qualify as "healthcare services" and that they should be eligible for the exemption.

However, the authority found that the applicant failed to provide evidence of their own accreditation by NABL or DSIR. The authority concluded that the applicant's involvement in sophisticated testing and consultancy does not suffice to qualify as a clinical establishment. The applicant's reliance on accredited companies for testing indicates a subcontracting role rather than functioning as an independent clinical establishment.

2. Qualification of the Applicant as a "Clinical Establishment" under Clause 2(s) of the Notification:

The applicant argued that their services qualify them as a clinical establishment as defined under clause 2(s) of the Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. This clause defines a clinical establishment as an institution offering services or facilities requiring diagnosis or treatment in any recognized system of medicine in India.

The authority noted that the applicant did not provide the names of the companies they claimed to collaborate with, nor did they produce any documents proving their own accreditation status. The authority emphasized that mere involvement in sophisticated testing and consultancy is insufficient to qualify as a clinical establishment. The applicant's role as a subcontractor to accredited companies further disqualifies them from being recognized as an independent clinical establishment.

Conclusion:

The authority ruled that the applicant does not qualify for the exemption under Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017 and the corresponding notification under the MPGST Act. The applicant failed to prove their legal status as a clinical establishment and is merely functioning as a subcontractor to other accredited companies.

Ruling:

1. The applicant is not entitled to the benefit of serial no. 74 and para 2(s) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and the corresponding notification under the MPGST Act.
2. This ruling is valid subject to the provisions under section 103(2) until declared void under Section 104(1) of the GST Act.