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TMI Blog2023 (6) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... tion no 12/2017-CGST Rate dated 28 06 2017? - whether this is composite supply or not? - HELD THAT:- As per Section 2(30) of CGST Act, 2017, defines Composite supply as supply 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. Healthcare service is exempt from GST Tax. Whereas supply of medicines is taxable - the supply to the in-patients by the hospitals, as advised by the doctor may be a part of composite supply of healthcare and not separately taxable, but Here in this case it is observed that medicines are providing by applicant to outdoor patient. Applicant claimed that these medicines are not available in market thus the medicine supplied by them is a composite supply - there are nothing supporting that establish that the medicine form part of counselling services provided by physiatrist. Thus, it is observed that the supplies being made by applicant are not composite supply. Services for the prevention and treatment of substance misuse and substance use disorders have traditionally be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as it falls under the ambit of the Section 97(2) (b), (e) & (f)given as under: (b) applicability of a notification issued under the provisions of this Act; (e) determination of the liability to pay tax on any goods or services or both, (f) whether applicant is required to be registered; A. SUBMISSION OF THE APPLICANT: (in brief) 1. M/s Sanjeevani Psychiatric Clinic (hereinafter referred to as "applicant") registered as Partnership firm, is a clinical establishment located at Sardar Shahar Mega Highway, opp. Bhadu Petrol Pump, Rawatsar Distt. Hanumangarh-335524 under section 15 of The Clinical Establishment (Registration and Regulation) Act, 2010. The clinical Establishment is registered for providing medical services as a Single Specialty under Allopathy System of Medicine by Dr. Rinet Sonia Dsouza (MBBS, MD). 2. That, the applicant is providing Treatment of patients suffering from substance use disorder (SUD) (addiction of drugs) in the state of Rajasthan. 3. That as per National Institute of Mental Health, Substance Use Disorder (SUD) is a mental disorder that affects a person's brain and behavior, leading to a person's inability to control their use of substanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the psychiatrist and prescription issued by him, patients are dispensed medicines in exact quantity as per the prescription of psychiatrist. • The patient has no choice to take the medicine from a general medical store or take medicine of a different brand or in a different quantity. • Moreover, the patient has no choice/freedom to take these Medicines from any other De-Addiction Center based on said prescription. • The drugs used for treating drug addicts are strictly government-controlled drugs and are not available for sale on general medical stores. • The name and quantity of the medicine dispensed to the patient along with dose per day of medicine is captured in Daily Dispensing Register. • Further, a stock register of the medicine is maintained at the establishment, which is verified and signed by the Psychiatrist. 6. That, the fees is collected from the patient after dispensing of medicines i.e. only after the above steps are complete. The fees may differ from patient to patient depending upon the examination, prescription and the duration of prescription as advised by the Psychiatrist. B Interpretation and understanding of applicant on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1A) Where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.] 5. That as per Section 2(30) composite supply is defined as (30) "composite supply" means 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;; (90) "principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; 6. That as per Section 8 Tax liability on composite and mixed supplies The tax liability on a composite or a mixed supply shall be determined in the following manner, namely: (a) a composite supply comprising two or more supplies, one of which is a principal supply, shall be treated as a supply of such principal supply; and (b) a mixed supply comprising two or more suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nario, on perusal of fact, it is evident that all the four elements as specified above are available to qualify the treatment of SUD Patients by the applicant as a supply. 12. That, in continuation of above, the subsequent issue for determination is whether this transaction is an individual supply of service or goods or both or whether it's a composite supply. A Composite Supply, from its definition under the Act(s) has following elements: a) a supply made by a taxable person to a recipient b) consisting of two or more taxable supplies of goods or services or both, or any combination thereof, c) which are naturally bundled and supplied in conjunction with each other d) in the ordinary course of business e) And one of which is a principal supply. 13. That in treatment of a patient suffering from SUD as outpatient the procedure is a chronological combination of the following services: a) Registration of Patient b) Counselling, Examination and prescription of medicine of Patient by Psychiatrist c) Dispensing of Medicine as prescribed by Psychiatrist in his presence. 14. That for a supply to become a composite supply, there must be minimum two independent supplie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus, every patient who requires a treatment need not be admitted, patients can be treated as outpatients as well. 19. That further, as per Central Drugs Standard Control Organization (FDC Division), the medicines provided to SUD patients i.e. Buprenorphine 2 mg/0.4 mg sublingual Tablet and FDC of Buprenorphine (2 mg+0.5 mg and 0.4 mg + 0.1 mg) sublingual tablets are strictly Government controlled drugs which are not available for sale on general medical stores. 20. That the supply of the above-mentioned drugs is restricted by government to be supplied only to specified clinical establishments. Further, the name, quantity and dosage issued to SUD patients arc also recorded in Daily Dispensing Register on real time basis. 21. That the SUD patients are mentally unstable, hence the medicines provided to them by as prescribed by Psychiatrist in his presence are controlled in terms of quantity depending upon their illness to avoid over consumption by the patients. Excess consumption of the drug may be fatal to the patient. Also, the SUD patients do not have a choice to take the medicine from general medical stores. 22. That, thus the process of being provided by the applicant to SU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner whatsoever. 25. That, based on above paras, it can be clearly said that the supply of medicine by the applicant to SUD patients as outpatient is a part of treatment and cannot be detached or taken up independently from the examination of the patient in addition to registration and counselling services. Thus, in our opinion, the given chronological activities of outpatients cannot be segregated as separate or independent activities and should be treated as part and of being provided to SUD patients as outpatient by the applicant. 26. That further, the given activity of undertaking treatment of the SUD parents by the applicant along with dispensing of medicine does not have any constituent which can be separated or bifurcated. The process of examination, prescription and issuance are integral parts of the whole activity of supplying service of detoxification. 27 That it given juncture, it is relevant to pin point that to qualify any supply as composite, one element has to be principal supply and other has to be ancillary The dictionary meaning of the term ancillary is "aiding, or a proceeding attendant upon or aids another proceeding considered as principal". However, in given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of service' and was liable to service tax [In favor of revenue] Specified descriptions of services or Bundled Service - Principles of Interpretations -Combining various elements into single transaction - If two or more elements are so closely linked that they form a single indivisible economic supply, which can be split only artificially, all those elements constitute a 'single supply' [In favour of revenue] Service - Definition of - Predominant element determines classification - If predominant element is service, then, whole transaction amounts to service even if element of goods is also involved - Predominance is to be determined considering extent, duration, usefulness and cost of various elements, economic essence, and intention of parties [In favour of Revenue] 31. That in fact in case of Hindustan Shipyard Ltd. v. State of Andhra Pradesh (2000) 6 SCC 579 it was held by the Hon'ble SC that The recitals of the contract may also be read in the light of the few provisions of Chapter III of The Sale of Goods Act. In a contract for the sale of specific or ascertained goods the property in them is transferred to the buyer at such time as the parties t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The question posed before us would, therefore, must be further refined, namely, whether a medical procedure can be severed into separate elements of service and sale with service being the medical advice and medical procedure and the sale being the supply of medicines, surgical items, implants, to patients whether as part of a package or to an individual patient? "We therefore, have no hesitation in holding that medical procedures/services offered by the petitioners are a service. The supply of drugs, medicines, implant, stents, valves and other implants are integral to a medical services/procedure and cannot be severed to infer a sale as defined under the Punjab or the Haryana Act and therefore, are not eligible to value added tax." [Emphasis supplied] 34. That the fact of the applicant is also similar because once it is decided by the authorized medical practitioner at applicant's premises that a patient needs treatment in respect of SUD, then the course of treatment, the dosage, the number of days of dosage and pattern of consumption is prescribed by them. Further the said patient is compelled to take the medicine on the same day only from the dispersion center of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases; 42. That there is no ambiguity in the fact that the applicant is a Clinical Establishment since it is registered under section 15 of Clinical Establishment (Registration and Regulation) Act, 2010 for providing medical Services as a Single Specialty under Allopathy System Of medicine. 43. That, the applicant is providing services of Treatment of patients suffering from substance use disorder specifically using Allopathy system of medicine. Allopathy is recognized systems of medicines in India as per Clause (h) of Section 2 of the Clinical Establishments Act, 2010. 44. That based on above paras, it is understood that the Sanjeevani Psychiatric Clinic is providing Health care services through a Clinical Establishment as defined in para 2(s) of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. The Clinic run by the applicant are very well recognized by the government itself as clinical establishments. 45. That the treatment being provided to SUD patients as outpatient is a single supply and that supply of medicines to the patients ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, opp. Bhadu Petrol Pump, Rawatsar Distt. Hanumangarh-335524 under section 15 of the Clinical establishment (Registration and Regulation) Act, 2010 The clinical establishment is registered for providing medical services as a Single Specialty under Allopathy System of Medicine by Dr. Rinet Soma Dsouza (MBBS, MD) We have limited scope Io check the registration certificate so We consider th.it applicant has truly submitted that they are registered clinical Establishment and pronounce the ruling accordingly. 3) The applicant submitted that the applicant is providing Treatment of patients suffering from substance use? disorder (SUD) (addiction of drugs) in the state? of Rajasthan and as per National Institute of Mental Health, Substance Use Disorder (SUD) is a mental disorder that affects a person's brain and behavior, leading to a person's inability to control their use of substances such as legal or illegal drugs, alcohol, or medications. Symptoms can range from moderate to severe, with addiction being the most severe form of SUDs. The applicant is involved in providing Outpatient Facility. A patient is treated as outpatient where the patient is not admitted, however the tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition 74 Heading 9993 Services by way of- (a) health care services by a clinical establishment, an authorised 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. nil nil 6.2) As per Section 2(30) of CGST Act, 2017, defines "Composite supply" as supply 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. Healthcare service is exempt from GST Tax. Whereas supply of medicines is taxable. We understood that the supply to the in-patients by the hospitals, as advised by the doctor may be a part of composite supply of healthcare and not separately taxable, but Here in this case we observe that medicines are providing by applicant to outdoor patient. Applicant claimed that these medicines are not available in market thus the medicine supplied by them is a composite supply. We do not find any supporting that est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices 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; 6.5) We held that Services for the prevention and treatment of substance misuse and substance use disorders have traditionally been delivered separately from other mental health and general health care services, because substance misuse has traditionally been seen as a social or criminal problem, prevention services are not typically considered a responsibility of health care systems. Further people needing care for substance use disorders have had access to only a limited range of treatment options that were generally not covered by insurance. Well-supported scientific evidence shows that the substance uses disorder treatment and mental health services from mainstream health care have traditional separation. 6.6) Thus considering definition of health care services as narrated in Notification no. 12/2017-CGST Rate dated 28-06-2017 as amended, and above discussion we he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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