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TMI Blog2021 (11) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... object and factually engaged in imparting Medical Education, satisfying all the criteria of "Educational Institution" is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 or it can remain outside the preview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply. i. In a situation if above questions are answered against the contention of the applicant institution then following further questions are being raised for the kind consideration by the Honourable Bench. a. Whether the fees and other charges received from students and recoupment charges received from patients (who is an essential clinical material for education laboratory) would constitute as "outward supply" as defined in section 2 (83) of The Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 and if yes then whether it will fall in classification entry at Sr. No 66 or the portion of nominal amount received from patients (who is an essential clinical material for education laboratory) at Sr. No. 74 in terms of Notification 12/2017 C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is authority, the applicant preferred an appeal before the Appellate Authority for Advance Ruling, Maharashtra State. The Appellate Authority vide its Order dated 13.12.2019 upheld the order passed by this authority. Further to this, the applicant filed a Writ Petition No. 1745 of 2020 before the Hon'ble High Court of Judicature at Mumbai against the order of the Appellate Authority mentioned above. The Hon'ble High Court in its order dated 30/8/2021 observed and directed as under: "We find that these orders do not answer the basic question raised by the petitioner-society. The question raised by the petitioner-society was as to whether or not the petitioner-society, on its own strength and in its own right, could be said to be entitled to seek exemption from the requirement of registration and also discharge of Goods and Service Tax liability ....................The authorities ought to have considered this contention independently of the activity of MGIMS and in the light of the manner in which the aims and objects of the society is fulfilled by the petitioner-society. Such exercise having not been done by the authorities below and no findings on these lines having be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the taxpayers who are liable to pay the tax shall be liable to be registered under this Act. In the instant case, thus it appears that the services not covered under the purview of educational services or health care services are taxable. E.g. food services file, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable), the amount received for renting of space for banking, parking and refreshment and amount received on account of disposal of wastes would fall within the meaning of supply. Therefore, they are required to be registered under this act. 3.3 Question No. 3 (Comments) :- In view of provisions Section 22 & 23 of the CGST Act, 2017, in the instant case it appears that the services not covered under the purview of educational services or health care services, are taxable. E.g. food services [i.e, other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable), the amount received for renting of space far banking, parking and refreshment and amount received on account of disposal of wastes would fall within the meaning of supply. Therefore, they are required to be regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r back for fresh consideration and appropriate decision, in accordance with law. 4.7 The applicant is engaged in imparting medical education and its activity was never in the nature of business therefore there did not obtain registration under the Bombay Sales Tax Act, VAT Act and Service Tax Act. This contention of applicant is squarely covered by the Judicial pronouncements already submitted on record in detail submission which are even equally applicable under GST since it has set out certain principles. 4.8 Even the GST Act is also not making any departure from the basic concepts those existed having applicability in earlier law which is evident from the scope of Section 2(17) of The CGST Act defining 'Business" that gives the context to the above-mentioned term just like in earlier Tax laws, where the effective tax to be paid is always on business transaction. Further as per Section 2(83) of MGST/CGST only commercial transactions are taxable, if any activity whether made or agreed to be made is neither for continuity of business nor for advancing or furtherance of the business, such transaction, will not be a supply at all. Hence, the activity of the Applicant Institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... composite supply" qualifying for exemption under the category of "health care services." Clause 2. (zg) of Notification 12/2017 Central Tax - dt. 28/6/2017 provides the scope of "health care services" by hospital which covers vide range of services in respect of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India. The applicant collects nominal charges from patients treated through the OPD section of hospital which includes various pathological and/or high-level investigation and also for medicines and consumables provided, in order to cure from varied illness and as such the said charges bundled together would composite supply like for IPD patients and accordingly would fall within the exempt category "health care services." 4.14 With regards to Question No. (iii) (c) applicant states that in order to comply with mandatory requirements of medical education, the Society had to attract the patients by providing patient's friendly atmosphere equipped with the teaching lab with the advance equipment, implements, apparatus and qualified experts as well as trained medical personnel, and at the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business activity and thus obliging to comply with the provisions of GST Law. 4.17 Applicant was specifically excluded from the Scope of Dealer under earlier Laws. 4.18 It is beyond doubt that applicant Society is not obliged to get registered since the services provided by it i.e., educational services which includes services rendered to poor patient, are not covered by the definition of "Supply" as per charging section 7 of the CGST Act, 2017 which defines the scope of supply which is liable for GST. 4.19 Even in alternative, if the services of Applicant are treated as Supply still all the receipts fall within the scope of "Exempt Supply" and thus in terms of Section 23 applicant is permitted to remain without having registration. Further there being no occasion to register compulsorily under section 24 the Institute is not required to be registered under the GST Law and thus not obliged to comply with the provisions. 4.20 In contention that the KHS and MGIMS are not separate and legal entity the applicant has submitted XVIII documents duly supported by judicial pronouncements and therefore this honourable bench is humbly requested to consider KHS and MOMS as single entity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al or ancillary to (a) above; (c) any activity or transaction in the nature of(a) above, whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital assets and services in connection with commencement or closure of business; (e).........................; (f) admission, for a consideration, of persons to any premises,' and (g).........................; (h).........................; (i).........................; 5.4 The main thrust of the applicant's argument is on the fact that they are charitable institution, working without pecuniary benefits. However, the definition of "business" is an inclusive one and it covers almost all activities in its ambit, even those which are made without any pecuniary benefit. Medical education is a profession, so the same is covered by the said word profession as appearing in the definition; and the words used in definition viz other similar activities would also cover the other ancillary activities of the applicant in the scope of the said definition. The definition under earlier laws were not that much exhaustive. The applicant has not relied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an "educational institution". (Aditanar Educational Institution v. Additional Commissioner of income Tax, II 1971 224 ITR 310 (SC)). Educational Institutions, which are registered as a society, would continue to retain their character as such. The distinction sought to be made between the society and the educational institution run by it, does not therefore, merit acceptance. Incidentally Karnataka High Court in CIT Central v/s Children Education Society 358 ITR 373 has adopted the identical line of reasoning. 18.7 The above contention of the appellant gets further reinforced with evidences and information already gone on the authentic records of Central & State Govt. such as : Central Govt. * For release of Grant, which is in the name of KHS for running of MGIMS. (Ann-1) * Provident Fund and Pension Fund registration are the name of KHS for the employees working at MGIMS. (Annexure-II) * Grant of PAN is in the name of KHS through which all the financial transaction relating to MGIMS are reported to Central Govt. (Annexure-III) * Registration is in the name of KHS for carrying out the Research activities in the fields of Medical Education and Health Care by the staff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the submissions by jurisdictional officer), it is clear that the applicant is engaged in 'business'. The receipts on account of fees are for recognized courses. The fees are accounted for in the books of the M/s Kasturba Hospital Trust. MGIMS even does not have a bank account in its name. Thus we agree with the submissions made by the jurisdictional officer that, Applicant is providing the services of medical education (in view of the schedule entry which reads as under): Notification No. 12/2017-Central Tax (Rate) dated: 28.06.2017. Sr.No. Chapter No. Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 1 2 3 4 5 66 Heading 9992 Services provided - (a) by an educational institution to its students, faculty and staff; (b) to an educational institution, by way of,- (i) transportation of students, faculty and staff; (ii) catering, including any mid-day meals scheme sponsored by the Central Government, State Government or Union territory; (iii) security or cleaning or housekeeping services, performed in such educational Institution; (iv) services relating to admission to, or conduct of examination ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part of a curriculum for obtaining a qualification recognized by any law (in this case the qualification is recognized by the Nagpur University) for the time being in force the said supply would be exempt under the GST Laws (Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 refers). 5.10.1 Question No. (ii) :- Whether the applicant, a Charitable Society having the main object and factually engaged in imparting Medical Education, satisfying all the criteria of "Educational Institution" is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 or it can remain outside the preview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply 5.10.2 GST is a tax on the event of 'supply'. Every supplier of goods or services effecting taxable supply needs to get registered when the turnover of supply crosses the threshold limit as prescribed under the GST Act. As per the scheme of the Act, those suppliers, whose aggregate turnover of all supplies exceeds the threshold limit as prescribed under Section 22 (including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion No. (iii) and since turnover exceeds the threshold limit, the applicant is liable for registration. 5.11 The applicant submitted that if the answers to questions no (i) and (ii) are answered against the contention of the applicant institution then following further questions (iii) (a to d) are being raised. Since answer to question no. (i) of the application is against the contention of the applicant, it is necessary to deal with other questions asked. 5.12.1 Question No. (iii) (a) :- Whether the fees and other charges received from students and recoupment charges received from patients would constitute as "outward supply" as defined in section 2 (83) of the CGST Act, 2017 and MGST Act, 2017 and if yes then whether it will fall in classification entry at Sr. No 66 or the portion of nominal amount received from patients at Sr. No. 74 in terms of Notification 12/2017 C.T.-dt. 28/6/2017. 5.12.2 With regard to question no. (iii) (a) it is noticed that, the first part of the question is whether the fees and other charges received from students and recoupment charges received from patients would constitute as "outward supply" as defined in section 2 (83) of the CGST Act, 2017 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultants/ technicians independently, without any contract of such persons with the patient; and pay them consultancy charges, without there being any employer-employee relationship. Will such consultancy charges be exempt from GST? Will revenue take a stand that they are providing services to hospitals and not to patients and hence must pay GST? (2) Retention money: Hospitals charge the patients, say, Rs. 10000/- and pay to the consultants/ technicians only Rs. 7500/- and keep the balance for providing ancillary services which include nursing care, infrastructure facilities, paramedic care, emergency services, checking of temperature, weight, blood pressure etc. Will GST be applicable on such money retained by the hospitals? (3) Food supplied to the patients: Health care services provided by the clinical establishments will include food supplied to the patients; but such food may be prepared by the canteens run by the hospitals or may be outsourced by the Hospitals from outdoor caterers. When outsourced, there should be no ambiguity that the suppliers shall charge tax as applicable and hospital will get no ITC. If hospitals have their own canteens and prepare their own food; then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is admitted fact that the applicant provides a sort of medical insurance service and collects very small amounts towards premium, what is the object of provision of said service, would not alter the nature of provision of any service, Each service or group of services, provided has to be looked into separately with regard to schedule entries, as per the scheme of the act. The applicant is not holding license from Insurance Regulator to provide the insurance service. So said service would not get covered by the scope of insurance service. It will get covered by the residuary entry, which reads as under: Notification No 11/2017 Sl.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (%) Condition 35 Heading 9997 Other services (washing, cleaning and dyeing services; beauty and physical well-being services; and other miscellaneous services including Services nowhere else classified). 9 - Thus said insurance service is covered by the, residuary entry being taxable at 18%. 5.15.1 With regard to question no. (iii) (d) it is noticed that applicant desires to know the rate of tax of services viz Whether the nominal amount received for mak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cational institutions have mess facility for providing food to their students and staff. Such facility is either run by the institution/ students themselves or is outsourced to a third person. Supply of food or drink provided by a mess or canteen is taxable at 5% without Input Tax Credit [Serial No. 7(i) of notification No. 11/2017-CT (Rate) as amended vide notification No. 46/2017-CT (Rate) dated 14.11.2017 refers]. It is immaterial whether the service is provided by the educational institution itself or the institution outsources the activity to an outside contractor. Corrigendum to Circular No. 28/02/2018-GST; F.No. 354/03/2018 In Para 2 of the said circular, for "it is immaterial whether the service is provided by the educational institution itself or the institution outsources the activity to an outside contractor." "2.1 If the catering services is one of the services provided by an educational institution to its students, faculty and staff and the said educational institution is covered by the definition given under para 2(y) of notification No. 12/2017-Central Tax (Rate), then the same is exempt. 151. No. 66(a) of notification No. 12/2017-Central Tax (Rate) refers] 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aharashtra Goods and Service Tax Act, 2017 in totality. Answer:- Answered in the affirmative. However, in view of the submissions made by the applicant and discussions made above, we find that applicant is engaged in imparting Medical Education and it is an exempt service. Question (ii):-Whether the applicant, a Charitable Society having the main object and factually engaged in imparting medical education, satisfying all the criteria of "Educational Institution" is liable for registration under the provisions of section 22 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 or it can remain outside the purview of registration in view of the provisions of section 23 of the said act as there is no Taxable supply. Answer :- The applicant is liable for registration as discussed above. Q.No. (iii) (a) Whether the fees and other charges received from students and re-8coupment charges received from patients (who is an essential clinical material for education laboratory) would constitute as "outward supply" as defined in section 2 (83) of The Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 and if yes th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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