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TMI Blog2022 (12) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... services by way of imparting medical education through MGIMS, and providing the health care services through Kasturba Hospital, can be construed as Business in terms of the provisions of CGST Act, 2017? - HELD THAT:- On perusal of both the definitions of the term business, it is noticed that the definition of the term business under the erstwhile Bombay Sales Tax Act, 1959, does not include the entries profession and vocation, which are present in the definition of the term -business under the CGST Act, 2017, thereby, rendering much wider meaning and scope to the term business under CGST Act, 2017. Thus, the term business under the CGST Act, 2017 is wide enough to include the activities of the Appellant-Society. Thus, the contention of the Appellant is not tenable. Whether the said activities of educational services and health care services undertaken by the Appellant will be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017, or not? - HELD THAT:- As it is an admitted and undisputed fact that the Appellant-Society are providing the education and health care services through its two arms, namely, MGIMS and Kasturba Hospital, respectively. Further, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and patients whereas the services of renting of immovable property are provided to some third party consumers, who run their establishments on their own account on the land made available to them by the Appellant against certain consideration. Thus. It is apparent that these services under consideration are not provided to a single recipient as mandated under the provisions of composite supply under section 2(30) of the CGST Act. 2017, and accordingly, cannot be said to be part of the composite supply. Appellant receive an amount on account of disposal of wastes such as medical equipment, apparatus, and other instruments, etc., by selling them to the interested vendors - HELD THAT:- The said activities of the supply of the scrap to the vendors are not being made to the students or the patients. who are the recipients of the exempted supply of educational services or health care services respectively, and therefore, the said supply can aptly be construed as independent and separate supply, attracting the levy of GST thereon at the applicable rate prescribed under Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. The Appellant-Society are rendering exempted services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tration Under the Societies Registration Act, 1860 vide registration No.95/64(Wardha) and also under. The Bombay Public Trust Act. 1950 vide registration No.F-87 (W) on 11 th Day of September 1964, with the sole objective of attending the health needs of rural India. 5. On account of its Charitable Objects for solely focusing on Health and Medical Education. the Appellant society was also registered under Section 12AA of the Income Tax Act, 1961 besides having recognition under the Foreign Contribution Regulation Act 1976. The society since carried out various Health related research activities, it was recognised as a Research Institute by the Department of Science and Technology. Government of India, and further under Section 35(1)(ii) of the Income Tax Act 1961. 6. The Appellant is existing solely for imparting the Medical Education, till Post Graduation, as a Joint Venture having funding from Central Government @ 50%, State Government @ 25% and remaining 25% comes mainly by way of Fess from Students and Patients. The Appellant is having its setup in form of Medical College named as Mahatma Gandhi Institute of Medical Science . at Village Sewagram, Dist. Wardh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r learnt that those who have attempted to register. had also applied for the cancellation of registration, which is duly cancelled by the jurisdictional GST authorities after considering their nature of activity and having convinced that they are not liable for registration. 10. The Applicant society tiled application for advance ruling on 04.02.2019 in respect of following questions: - i. Whether the applicant, a Charitable Society, having the main object and factually engaged in imparting Medical Education , satisfying all the criteria of Educational Institution , can be said to be engaged in the business so as to cast an obligation upon it to comply with the provisions of Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax Act, 2017 in totality. 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 Services Tax Act, 2017 and Maharashtra Goods and Services Tax Act, 2017, or it can remain outside the purview of registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rba Health Society and MGIMS are separate and distinct person and as such are two separate entities and therefore question were not answered. The Applicant preferred an appeal before the Appellate authority for advance ruling Maharashtra state (MAAAR), who vide its order No. MAH/A AAR/SS-RJ/19/2019-20 dated 13.12.2019 upheld the order passed by the lower authority. The Appellant challenged both these orders in writ petition No.1745 of 2020 before the High-court of judicature at Mumbai in which the Hon'ble court vide order dated 30.08.2021 observed and directed as under: We find that these orders to 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 bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17. The MAAR has erred in holding that the nominal charges received from the activities which are not in the nature of business are taxable @ 18% as Rent. 18. The MAAR has failed to consider that the Appellant is covered by Sr. No. 1 under exempt service Notification No. 12/2017 dated 28.06.2017, and as such there exists no element of Taxable Service. 19. In respect of Question (i), It is held by the MAAR that Appellant has not relied on particular provision or schedule entry or any particular notification to prove that they are not covered under the scope of word business . This finding is contrary to the material already placed on record which inter-alia referred to the definition of Business under Section 2(17), Supply under section 2(87) and meaning of in furtherance of business . Further the reference was also made to the various judicial pronouncements. The appellant submitted in detail on page No 14 of Application dated 27.01.2019 before the MAAR, as to how its activity cannot be held as carrying on any business. Further the Appellant has never sought the mandate on the strength that there is no pecuniary benefit. If at all is to be proved that education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing submissions: 25.1 That the Appellant-Society and M/s. MGIMS are two separate and independent persons in so far as the GST law is concerned; and therefore, the contention of the Appellant-Society in as much as they and M/s. MGIMS may be treated as one and the same entity, and accordingly, the advance ruling application filed by them to seek clarifications in respect of the issues under questions may be considered and the questions posed therein may be answered, cannot be accepted; 25.2 As regards the issue pertaining to the registration of the Appellant-Society owing to the various activities/transactions undertaken by them wherein apart from the providing educational services and health care services, they are also engaged in other activities such as making space available for parking, banking and refreshment canteen for certain consideration, disposal of equipment/apparatus wastes against some consideration, it is submitted by the Respondent that a person has to obtain registration where even a small portion of services or goods sold by him are subject to GST. Therefore, in the present case, the Appellant have to register themselves under GST and are also bound to file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provide the benefit of concessional rates for investigations and treatment of the disease, may be treated as advance towards the provision of the health care services which would be provided by them to the subscribers of this scheme in future. He further added that though the name of Scheme includes the word insurance, but it is an advancement of health care service to specified class of citizens. The subscription amount charged under the pertinent scheme, is nothing but the advances towards the health care services to be provided and since the health care services are exempted in term of Sr. No. 74 of the Notification 12/2017 Central Tax(R) - dt. 28/6/2017, the subscription amount charged under the pertinent scheme will also be rightly eligible for exemption the said entry at SI. No. 74 of the Rate Notification. DISCUSSIONS AND FINDINGS 29. We have carefully gone through the entire appeal memorandum containing facts of the case and the submissions made by the Appellant vis-a-vis the MAAR Order dated 10.11.2021 pronounced in respect of the questions raised by the Appellant in the advance ruling application filed by them. 30. On perusal of the Appeal memorandum encapsul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Meaning of the term profession as per the Collins Dictionary : A profession is a type of job that requires advanced education or training. 31.2 Thus, on perusal of the aforesaid dictionary meaning, it is amply clear that the Appellant-Society through its establishment MGIMS is undertaking such job or work which require the service of highly educated, trained, and skilled persons in the form of doctors hired by them for imparting the medical education to the students, hence the said work done by the Appellant can be said to be in the nature of profession . and accordingly, will be construed as business in terms of the GST provisions. Similarly, the provision of health care services by the Appellant through its another establishment Kasturba Hospital can also be deemed as profession as envisaged under the definition of the term business provided under the GST law, and therefore, the said activity of the Health Care Services provided by the Appellant will be construed as business under the CGST Act, 2017. 31.3 The MAAR has also held that the said activities of imparting medical education and health care service performed by the Appellant is in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociety as discussed hereinabove. Thus, the contention of the Appellant is not tenable. 32. Now once it has been established that the activities undertaken by the Appellant-Society are in the nature of business, we will proceed to examine as to whether the said activities of educational services and health care services undertaken by the Appellant will be construed as supply in terms of section 7(1)(a) of the CGST Act, 2017, or not. For this, we would like to refer to section 7(1)(a), ibid., which reads as under: Section 7 For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. 32.1 Thus, the term Supply , under the CGST Act, has got very wide connotation due to the presence of the clause all forms of supply of goods or services or both . For any transaction to be qualified as supply under CGST Act, 2017, the said transaction is required to satisfy the following pre-requisites: i. that such supply should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agpur University, MGIMS, an establishment of the Appellant-Society, falls under the category of educational institution as defined under the GST law, and accordingly, it is held that the medical education services provided by the Appellant to the students will attract nil rate of GST as per the aforesaid entry 66, ibid. 33.2 Further. the second activities of the health care services provided by the Appellant-Society through its establishment, Kasturba Hospital, will squarely fit under the entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017, the relevant entry of which reads as under: SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (percent) Conditions 74 Heading 9993 (a) Services by way of- (a) health care services by a clinical establishment, an authorized medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Sonography during the course of diagnosis and treatment of disease [Question (iii) (b)]; II. the nominal charges received from patients towards an Unparallel Health Insurance Scheme so as to provide them the benefit of concessional rates for investigations and treatment of the disease [Question (iii) (c)]; III. the nominal amount received for making space available for facilities, such as Banking, Parking, Refreshment etc. and the amount received on account of disposal of wastes [Question (iii) (d)]; 35. As regards to the first activity, mentioned at I [Question (iii) (b)] above, where the Appellant are recovering the cost of Medicines and Consumables recovered from OPD patients along with nominal charges collected for Diagnosing by the pathological investigations, other investigation such as CT-Scan, MRI, Colour Doppler, Angiography, Gastroscopy, Sonography during the course of diagnosis and treatment of disease, it is observed that the said activities would fall within the meaning of composite supply qualifying for exemption under the category of educational and/or health care services , it is opined that the aforesaid services are indispensable for renderi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SI. No. 35 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. On the other hand, we concur with the Appellant's contention wherein the Appellant have contended that the said nominal amount being charged by them are in the nature of advances towards the provision of the health services which would be provided by them to the subscribers of the said scheme, and hence is eligible for exemption under the entry at SI. No. 74 of the exemption Notification No. 12/2017-C.T. (Rate) dated 28.06.2017. 37. As regards to the third activity, mentioned at III [Question (iii) (d)] above, wherein the Appellant is receiving a nominal amount for providing space for the facilities, like Banking, Parking, Refreshment Canteen. etc., it is observed that the said activities are not directly provided to the students or patients, who are the recipients of the main services of the Appellant, i.e., the educational services and health care services, which have been held as exempted services hereinabove, rather the said services of renting of immovable property by way of providing space for the facilities like banking, parking, refreshment canteen, have been provided to the third parties, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered as separate and independent supplies, and will be taxable at the applicable rate of 18% in terms of the item (iii) bearing the description Real estate services other than (i) and (ii) above of the entry at SI. No. 16 of the Notification No. 11/2017-C.T. (Rate) dated 28.06.2017. 37.3 Now, as regards the activity, wherein the Appellant receive an amount on account of disposal of wastes such as medical equipment, apparatus, and other instruments, etc., by selling them to the interested vendors, it is found that MAAR has not answered this query. In this regard it is observed that the said activities of the supply of the scrap to the vendors are not being made to the students or the patients. who are the recipients of the exempted supply of educational services or health care services respectively, and therefore, the said supply can aptly be construed as independent and separate supply, attracting the levy of GST thereon at the applicable rate prescribed under Notification No. 01/2017-C.T. (Rate) dated 28.06.2017. 38. In view of the above discussions, it is observed that the Appellant-Society are rendering exempted services as well as taxable services. Hence, it is conclud ..... 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