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TMI Blog2019 (7) TMI 1331X X X X Extracts X X X X X X X X Extracts X X X X ..... cility as per the scheduled procedure and have strict restriction to ensure, quality/quantity of items for consumption. These in-patients are provided medicines, implants, surgical items and other allied items, dietary food advised by nutritionist etc. During the course of such treatment after admission in to the hospital they are also provided rooms on rent. Hence such patients live in the hospital during the course of provision of healthcare services by hospital to the to the patients admitted for diagnosis or treatment in hospital. There is no doubt that the supply of medicines, consumable, implants and allied items provided by the hospital through the pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment - the subject hospital is considered as a clinical establishment under the GST Laws and since it is providing health care services, such services are exempt in view of Sr. No. 74 mentioned above, The entire supply of services by the hospital, like supply of medicines, surgical items, implants, consumables and other allied items, treatment procedures, diagnostic procedures, supply of food to patients, room on rent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hospital owned pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? 2. Whether the supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharmacy to the out-patients, is part of composite supply of health care treatment; and hence not taxable under CGST/SGST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) raised The applicant M/s. Terna Public Trust, is a holder of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the patients who take registration in the hospital. A very few outsiders also sometimes buy medicines on the prescription given by the outside doctors/outside hospitals. Presently they are charged with GST. 3. The medicines, surgical items and other allied items supplied through the pharmacy is incidental to the health services rendered in the hospital. The pharmacy is meant largely for dispensing medicine and consumables to the inpatients or outpatients of the hospital. 4. Under pre-GST period there were several decisions pertaining to the point that the supply of medicines, surgical items, x-ray etc. to the patients in the course of treatment by hospital cannot be said to be sale. 5. As per the GST Act the clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnostics or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 12/2017-CT (Rate) dated 28.06.2017. 11. Further, the Government of India vide Circular No. 27/01/2018-GST dt. 04/01/2018 has clarified that room rent in hospital is exempted. 12. Further, the clarifications issued based on the approval of 25 th GST Council Meeting held on 18-01-2018 [F.No.354/17/2018-TRU Dt.12-02-2018], clarifying that food supplied to the inpatients, as advised by the doctor/nutritionist, is a part of composite supply of health care and not separately taxable. 13. The Applicant is of the view that the medicines, surgical items, implants, consumables and allied items supplied through hospital owned pharmacy to both inpatients and outpatients under the prescription of the doctors are incidental to the health care services rendered in the hospital and beyond the ambit of taxation being health care services. Food supplied Room provided on Rent to in-house patients is also, according to the applicant, not taxable. 14. Hence the Applicant seeks advance ruling on the liability of hospital under SGST /CGST Act on the supply of medicines and allied items through the hospital owned pharmacy. 15. Enclosures wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est), Navi Mumbai, PIN- 400706 (hereinafter referred as hospital for the sake of brevity). The applicant is rendering medical services (health care services) with professionals like doctors, nursing staff, lab technicians etc. mostly on charitable basis. 2. In addition to and in support of its application for advance ruling, the applicant further submits as under,- 3. The hospital owns and runs a pharmacy. During the course of treating the in-house patients admitted in the hospital medicines, surgical items, implants, consumables and allied items are used. For proper care and watch by doctors/ nurses a room on rent and food from hospital canteen under the supervision of dietician is provided to the in-house patients as a part of overall health care. 4. GST is not charged on the medicines, surgical items, consumables and allied items used for treating such in-house patients (Patients admitted in hospital). Further, for a room provided on rent and food provided from hospital canteen to the in-house patients is also not charged to GST. 5. However, at present the GST is charged to out-patients, (OPD patients) treated by Hospital who buy medicines, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inpatients and outpatients under the prescription of the doctors are incidental to the health care services rendered in the hospital and beyond the ambit of taxation being health care services being composite supply. Food supplied and room provided on rent to in-house patients is also, according to the applicant, composite supply of health care treatment and being health care services exempt form GST and so not taxable. 12. Applicant relies on the following decision of the Kerala Authority for Advance Ruling- a) M /s. Ernakulam Medical Centre Pvt. Ltd. Advance Ruling No. KER 16/2018 Dt. 19.9.2018 = 2018 (10) TMI 511 - AUTHORITY FOR ADVANCE RULINGS, KERALA (Copy enclosed as Enclosure D ). b) M/s. KIMS Healthcare Management Ltd. Advance Ruling No. KER 17/2018 Dt. 20.10.2018 = 2018 (11) TMI 281 - AUTHORITY FOR ADVANCE RULINGS, KERALA (Copy enclosed as Enclosure E ) It is held in this decision that the supply of medicine, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment are naturally bundled and are provided in conjunction with each other, would be considered as composite s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of dealer is clear that in house services and supply of medicine are two different things. Hence the supply of medicine is liable to pay under GST. 04. HEARING Preliminary hearing in the matter was held on 09.04.2019. Sh. Ravindra Aluri, CFO appeared and requested for admission of their application. Jurisdictional Officer Sh. Sudhir Tambe, State Tax Officer (C-002) Raigad division, Navi Mumbai also appeared. The application was admitted and called for final hearing on 06.05.2019, Sh. V. V. Guthe, Advocate, appeared and made an oral and written submissions. Jurisdictional Officer Sh. Sudhir Tambe, State Tax Officer (C-002) Raigad division, Navi Mumbai appeared and requested for time to make written submissions. We heard both the sides. 05. OBSERVATIONS We have gone through the facts of the case, documents on record and submissions made by both, the applicant as well as the jurisdictional office. The applicant has submitted that they are running a hospital Research Centre under the name and style Terna Specialty Hospital Research Centre at Navi Mumbai, PIN- 400706 and the said hospital owns and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the patients admitted for diagnosis or treatment in hospital. We have no doubt that the supply of medicines, consumable, implants and allied items provided by the hospital through the pharmacy, as well as food, room on rent to the in-patients is part of composite supply of health care treatment. Sr.No. 74, Heading No. 9993 of Notification No. 12/2017-CT(Rate) dated 28.06.2017, exempts services provided by way of health care services by a clinical establishment, an authorized medical practitioner or paramedics. The term clinical establishment has been defined under clause (s) under Definitions in the said Notification and is reproduced as under: clinical establishment means a hospital, nursing home, clinic, sanatorium or any other institution by whatever name called, that offers services or facilities requiring diagnostics or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. Thus, subject hospital is considered as a clinical es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho also gets patients who come to him for medical diagnosis, treatment, etc. and the medical practitioner, after examining his patients either supplies medicines and/or writes out prescriptions. When the medicines are also supplied the medical practitioner charges fees to the patients for his services, which do not attract GST, medicines being included in the composite supply of health services. However this exemption as per Sr.No. 74 above, is available only when the medical practitioner is authorized to practice medicine. In the subject case the hospital is also supplying health services to its out-patients and in the process diagnoses the illness. However the treatment of such illness generally has to be done by medication and the prescription for such medication is given by the hospital. To this extent the hospital is providing exempted health services similar to that of an authorized medical practitioner. However, once the prescription is generated and the patients are allowed to purchase medicines from a pharmacy of their choice, then in that case, the health services are rendered only till the point of prescription. In such a case the supply of medicines, surgical items, imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out of purview of the Sr.No.74 mentioned above and GST is liable to be paid on such sale effected by the pharmacy. It may also be mentioned here that the Government of India based on the approval of 25 th GST Council Meeting held on 18.01.2018 (F.No.354/17/2018-TRU Dt. 12.02.2018), clarified that while food supplied to in-patients is a part of composite supply of health care and not separately taxable, other supplies of food by the hospital to persons other than in-patients, not admitted, are taxable. We find that the same principle is also applicable in the case of dispensing of medicines. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-135/2018-19/B-55 Mumbai, 21-05-2019 For reasons as discussed in the body of the order, the questions are answered thus Question 1:- Whether the supply of medicines, surgical items, implants, consumables and other allied items provided by the hospital through the hospital owned pharm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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