2022 (3) TMI 1144 - AAAR - GST

Exemption form GST - healthcare services - benefit of entry No.74 of exemption Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 - composite supply of services or not - whether the appellant is providing services by way of health care services by a clinical establishment? - HELD THAT - The services being provided by the appellant does not appear to fall within the ambit of Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) and the appellant has not been able to establish that its case squarely falls within the said entry of exemption notification claimed by it. The services being supplied by the appellant cannot be termed as services by way of health care services by a clinical establishment, an authorised medical practitioner or paramedics. As such, the services of the appellant cannot be held to be covered under 12 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. It is observed that in the clarification given at Point 5(2) of the aforesaid Circular No. 32/06/2018-GST, the issue being examined is in respect of retention money of ₹ 2,500/- out of total hospital charges of ₹ 10,000/- (out of which Consultant / Technician is paid ₹ 7,500/-). Thus, the major portion of the total hospital charges is towards payment to Consultant / Technician. Even the remaining minor portion of the hospital charges retained by the hospital is for providing ancillary services such as nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure etc. - In the present case, the appellant does not fall under the definition of clinical establishment as already discussed and the major portion of the package offered by the appellant is towards accommodation. Therefore, this clarification is not applicable in the facts of the present case. Applicant is not eligible to get the benefit of Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and corresponding Notification No. 12/2017-State Tax (Rate) dated 30.06.2017.

Issues Involved:
1. Eligibility for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.
2. Classification of services provided by the appellant.
3. Definition and applicability of "clinical establishment" and "health care services."
4. Interpretation of composite supply and principal supply.
5. Applicability of CBIC Circular No. 32/06/2018-GST dated 16.02.2018.
6. Previous exemption under Service Tax regime and its relevance.

Issue-wise Detailed Analysis:

1. Eligibility for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017:
The appellant sought exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts "health care services by a clinical establishment, an authorized medical practitioner or paramedics." The GAAR held that the services provided by the appellant do not fall under this exemption as the services are classified under Sub-Heading No. 996311, which pertains to "Room or unit accommodation services provided by Hotels, Inn, Guest House, Club and the like."

2. Classification of services provided by the appellant:
The GAAR classified the services provided by the appellant as a composite supply with the principal supply being accommodation services. The appellant contended that the principal supply should be the health care services (Naturopathy, Ayurveda, Yoga) and the accommodation and food should be incidental. However, the GAAR observed that the rates of the room per night form the major part of the consideration towards the selected package, leading to the conclusion that accommodation services are the principal supply.

3. Definition and applicability of "clinical establishment" and "health care services":
The terms "clinical establishment" and "health care services" are defined under the Notification No. 12/2017-Central Tax (Rate). The appellant did not provide sufficient evidence to classify itself as a "clinical establishment" as it does not have an Out Patients' Department (OPD) and only caters to in-patients with a minimum stay of 7 days. The appellant's services also include therapies not recognized as a system of medicine in India, such as Physiotherapy, Acupuncture, Reflexology, and Acupressure, which further disqualifies it from being recognized as a clinical establishment.

4. Interpretation of composite supply and principal supply:
The GAAR determined that the services provided by the appellant are a composite supply with accommodation as the principal supply. The appellant argued that the health care services should be considered the principal supply, but failed to provide evidence contradicting the GAAR's findings that the room rates form the major part of the consideration.

5. Applicability of CBIC Circular No. 32/06/2018-GST dated 16.02.2018:
The appellant referred to CBIC Circular No. 32/06/2018-GST, which clarifies that health care services provided by clinical establishments are exempt from GST. However, since the appellant does not qualify as a clinical establishment and the principal supply is accommodation, this circular does not apply to the appellant's case.

6. Previous exemption under Service Tax regime and its relevance:
The appellant had previously availed exemption from Service Tax under Notification No. 25/2012-ST. However, the letters from the Deputy Commissioner, Central Excise, Kalol Division, only advised the appellant to examine their Service Tax liability and did not provide a conclusive decision on the exemption. The previous Service Tax exemption does not influence the current GST exemption eligibility.

Conclusion:
The appeal was dismissed, and the GAAR's ruling was confirmed. The appellant, M/s. Oswal Industries Ltd. (M/s. Nimba Nature Cure Village), is not eligible for the benefit of Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The services provided by the appellant are classified as accommodation services, which do not qualify for the health care services exemption.

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