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TMI Blog2022 (7) TMI 1099X X X X Extracts X X X X X X X X Extracts X X X X ..... h each other, and it is viewed as a single package by the recipient, where he purchases the vaccine and gets it administered subsequently. In order to determine, which of the above two, is the principal supply, it would rather depend upon the normal or frequent practices followed in the area of business or the perception of the consumer / recipient as well. Generally, the primary requirement of the recipient would be the receipt of the vaccine, basing on his choice i.e., Covishield or Covaxin. Thus, the supply of goods constitutes the major supply. The proper administration of the vaccine by the technically qualified personnel as prescribed by the guidelines of the government becomes the ancillary supply, which involves 'service charge'. Hence the taxability of the total transaction in the instant case is based on the tax rate of the principal supply i.e., sale of vaccine @ 5 %. Whether the administration of Covid-19 vaccine by clinical establishments (hospitals) would qualify as Health Care Services as per Notification No.12/2017 Central Tax (Rate) dt. 28.06.2017 or not? - HELD THAT:- In this regard the dominant intention of the recipient is the receipt of the vacci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Institute of Medical Sciences Limited is a public limited Company, and a multi-speciality hospital, rendering healthcare services and claiming exemption on the said service vide notification no. 12/2017 Central Tax Rate. Apart from healthcare services, the Company also makes pharmacy supplies based on doctors prescriptions to outpatients, which is taxable and accordingly the Company remits taxes on the same. The Company has been permitted to administer COVID-19 vaccine. The process of administering COVID-19 vaccination has been narrated below: 3.1 Administration of vaccination: Vaccine administration is critical to ensure that vaccination is safe and effective. CDC (Centres for Disease Control and Prevention) recommends that all health care personnel who administer vaccines receive comprehensive, competency-based training on vaccine administration policies and procedures before administering vaccines. Comprehensive skills-based training should be integrated into existing staff education programmes such as new staff orientation and annual education requirements. Government has constituted National Expert Group on Vaccine Administration for COVID-19 (NEGVAC). The NEGVAC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Questions raised before the authority: The applicant seeks advance ruling on the following: 1. Whether administering of COVID-19 vaccination by hospitals is Supply of Good or Supply of Service? 2. Whether administering of COVID-19 Vaccine by clinical establishments (Hospitals) qualify as Health care services as per Notification No. 12/2017 Central Tax Rate dated 28.06.2017? 3. Whether administering of COVID-19 vaccination by clinical establishment is exempt under GST Act? On Verification of basic information of the applicant, it is observed that the applicant is under State jurisdiction, i.e. Assistant Commissioner (ST) Ongole-1 Circle, Nellore Division. Accordingly, the application has been forwarded to the jurisdictional officer and a copy marked to the Central Tax authorities to offer their remarks as per Sec. 98(1) of CGST /APGST Act 2017. In response, no remarks are received from the jurisdictional officer concerned on the issue, for which the Advance Ruling sought by the applicant. 5. Applicant's Interpretation of Law: A. The relevant provisions of the Act/ Rule/ notifications have been reproduced below for reference: 1. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... defined as a medical practitioner registered with any of the councils of the recognised system of medicines established or recognised by law in India and includes a medical professional having the reguisite qualification to practice in any recognised system of medicines in India as per any law for the time being in force B. Analysis of the provisions of the Act: Whether the supply of vaccination by hospitals is goods or service? If it is to categorize vaccination as sale of goods, we need to understand that vaccination is not supplied as a tangible product to the persons who intends to get vaccinated as a preventive measure. The vaccine vial consists of multiple doses which can be vaccinated to many persons and for such measurement, vaccination need to be carried by a technically competent person. The vaccination which is served to the person is one of the key medicines apart from the other consumables used during the vaccination process. Vaccine vial is not made available for sale by pharmacy/ hospitals and the beneficiaries are not at liberty to get it vaccinated by themselves or by other than a medical professional. Further, the beneficiaries are visiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They should be supplied in conjunction (event, time or contract) with each other in the ordinary course of business e One of the supplies being a principal supply (Principal supply means the predominant supply of goods or services of a composite supply and to which any other supply is ancillary) On review of vaccination process and key parameters of the composite supply, it is evident that the various components of supplies during the vaccination process are interdependent to each other and the supply cannot be performed without the other components and it is evident that each supply does not have its significance unless it is combined which is the feature of naturally bundled. The only objective of the person who is desired to get vaccinated is to build the immunity against the chronic virus and get himself protected from harmful virus. The person is vulnerable to COVID-19 virus without vaccination. The vaccination process cannot be self-administrated without support of medical practitioner and the same is not available for purchase and get it processed by a different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per Notification No. 12/2017 Central Tax Rate dated 28.06.2017 and eligible for exemption. To begin with, we discuss the primary question, whether administering of Covid -19 vaccine by hospitals is 'supply of goods or services or both goods and services'. Basically, two activities are involved in this transaction, 'sale of vaccine' under 'supply of goods' and 'administering of vaccine' under 'supply of service'. When it comes to administering of the vaccine by hospitals, it involves a combination of two supplies, which are naturally bundled, i.e, 'supply of vaccine' and the 'service component' followed by way of administering the same. It is moreover, in the nature of Composite Supply, which is defined in the Act as under, Composite supply: a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or any combination thereof, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply; In the present case, both the supplies are intrinsically connected with each othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; In this regard the dominant intention of the recipient is the receipt of the vaccine followed by its administration. In the instant case, there is no doubt that the applicant qualifies to be a clinical establishment but, the supply transaction is predominantly of sale of goods and not the service component of healthcare. It has been settled by various Advance Ruling Authorities that inpatient services are covered under the healthcare services extended by the clinical establishments, which are exempt under GST. By no stretch of imagination, the receipt of vaccine can be considered as inpatient services rendered by the hospitals in this regard. Finally, we arrive at the conclusion that exemption is not allowed in the instant case as claimed by the applicant under 'health care services&# ..... X X X X Extracts X X X X X X X X Extracts X X X X
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