2019 (10) TMI 1019 - AAR - GST

Exemption from GST - health care service provider - Whether applicant being a health care service provider, are exempted from tax or not? - HELD THAT - The transaction of the applicant is examined and it is seen that the applicant has entered into a contract with the contractee (hospital) for providing diagnostic services in their premises for the patients referred to by the hospital. The patients are liable to pay charges on that account to the Hospital and the applicant has nothing to do with it. The applicant only scrutinizes whether the payment is done or not and once the payment is done to the Hospital as per their schedule of charges, they carry out the diagnostic tests on the patients. The service thus provided is to the contractee and not to the patients. The consideration is also payable by the contractee to the applicant and hence the contractee is the recipient of the services by virtue of clause (93) of section 2 of the CGST Act, 2017. Since, the contractee is liable to pay the consideration involved in the supply of services to the patients, the contractee would be deemed to the recipient of services and it does not matter whether the contractee collects the amount from the patient or not - the services by way of diagnosis for illness, deformity-, abnormality or pregnancy are covered under health care services . Whether the applicant is a clinical establishment as contemplated in Entry No.74 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017? - HELD THAT - Since the applicant is offering diagnostic services, they would be covered under the term clinical establishment for the purposes of entry no. 74 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017. The service provided by the applicant would be covered under Services by way of health care services by a clinical establishment and hence covered under entry 74 of the Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 and hence is exempted from GST. It is pertinent to note that there is no condition relating to the recipient of these services in the said entry.

Summary

Issues:
1. Whether the applicant, a healthcare service provider, is exempt from tax or not?

Analysis:
The applicant, an unregistered Private Limited Company, filed for an Advance Ruling seeking exemption from tax as a healthcare service provider. The applicant operates on a PPP model with government hospitals for diagnostic services. They bear all related expenses, receive bills from vendors with different GST slabs, and pay expenses including GST without claiming ITC. The applicant does not engage in services under reverse charge mechanism. The applicant listed services provided to various hospitals and detailed their billing process based on government schemes.

Findings & Discussion:
The Authority examined the applicant's transaction and determined that the services provided were to the contractee hospitals, not directly to patients. The contractee is deemed the recipient of services as per the CGST Act. The applicant sets up infrastructure for diagnostic services within hospital premises, falling under the definition of "healthcare services" as per Notification No. 12/2017. The term "clinical establishment" includes institutions offering diagnostic services, thus covering the applicant's services.

The Notification No. 12/2017 exempts healthcare services by a clinical establishment from GST. The applicant's diagnostic services fall under this exemption as a clinical establishment. The ruling states that the diagnostic services provided by the applicant to hospitals are exempt from CGST and KGST under entry no. 74 of Notification No. 12/2017. The ruling confirms that the applicant's services are covered under the exemption for healthcare services by a clinical establishment.

In conclusion, the Authority ruled that the diagnostic services provided by the applicant to hospitals are exempt from CGST and KGST under entry no. 74 of Notification No. 12/2017. The ruling affirms that the applicant's services qualify for exemption as per the relevant provisions of the tax acts.