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TMI Blog2023 (6) TMI 488X X X X Extracts X X X X X X X X Extracts X X X X ..... licant is exempt under entry 74(a) of notification no. 12/2017-CGST Rate dated 28-06-2017? - whether this is composite supply or not? - HELD THAT:- The treatment of cancer inpatient in hospital is healthcare service and which is exempt under Notification no 12/2017 dated 28.06.2017 - 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 and other services i.e room charges etc. are taxable. Whether the supply by applicant is composite or not? - HELD THAT:- C.B.I C has clarified vide Circular No. 27/01/2018-GST, dated 4-1-2018 that room rent in hospital is exempted. Further clarifications vide circular No. 32/06/2018-GST, (F.No. 354/17/2018 TRU Dt. 12.02.2018) issued based on the approval of 25th GST Council Meeting held on 18.01.2018, it was clarified that Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... At the outset, we would like to make it clear that the provisions of both the CGST Act and the RGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the RGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / RGST Act would be mentioned as being under the "GST Act". The issue raised by M/s Innovations Medi research Private Limited, B-l Ashadeep Enclave-A, Near Akshyapatra Jaipur, 302025, Rajasthan (hereinafter referred to as "applicant") GSTIN 08AADCI2651K1ZH. Applicant is registered as registered under Companies Act, 2013 located in the state of Rajasthan. A unit of the applicant is providing treatment to the patients suffering from Cancer under the name of Asian Cancer Hospital located a B-1, Ashadeep Enclave-A, opposite Ashadeep Green Avenue, Nilay Kunj Road, Jagatpura, Jaipur in the state of Rajasthan. The question raised by applicant in respect of a patient who is admitted in the hospital and is treated as inpatient is fit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as Inpatient by the applicant is carried out in as following: i. Patient visits as outpatient for consultancy or under emergency • Patients either visit as outpatients for consultancy or due to emergency, wherein they consult the doctor who diagnoses the ailment on basis of various test reports and advises the treatment accordingly. The treatment may require the patient to be admitted and treated as Inpatient. This is a scenario where an outpatient converts into an Inpatient. ii. Treatment as Inpatient • The patients undergo an admission process and shifted to a ward/room, where they are provided nursing care and treatment. • The patients are given required medicines as prescribed by the doctors during his treatment. A Vital Chart of the in-patient is also maintained where details like BP, pulse, SPO2, temperature, RR are captured. The patient is visited by the doctor who assesses and review the medicines being given to the patient. A follow up sheet is maintained for all inpatients wherein details of their clinical finding and treatment advised is maintained. A specimen patient's Vital Chart and Follow up Chart has been annexed as specimen and marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. Explanation. - For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another;] (b) import of services for a consideration whether or not in the course or furtherance of business; (c) the activities specified in Schedule I, made or agreed to be made without a consideration [(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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lemented in India, is governed by Section 9 of the CGST Act 2017 and SGST Act 2017 (hereinafter together known as "GST Act(s)) which lays its thrust upon supply of goods or services. The ingredients of a supply under the GST Act(s) have been enumerated under Section 7 of the Act(s) which has essentially four elements i.e. a) A Supply (Generic) b) Of Goods or Services c) For Consideration d) In course of or furtherance of business 11. That in the absence of any of these elements, the transaction falls beyond the scope of supply as given under the GST Act(s) and hence in such a case, the levy of tax would not be attracted. In the given scenario, on perusal of fact, it is evident that all the four elements as specified above are available to qualify the treatment of cancer 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 suppli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever in given case, as already explained all activities are essential elements but no activity is predominant to other. 19. That rather, the dictionary meaning of term "Integral" is essential part or inseparable. In given case as all activities as mentioned above are essential, hence it can be said that they are "integral" to the process of treating inpatients and hence is one single unified supply. 20. That thus there is no supply of goods in the given transaction but rather same is an integral part of the supply of treatment of inpatients by the applicant. The similar view has been held in case of Card Protection Plan Ltd v. Commissioners of Customs and Excise [2012] 22 taxmann.com 176 (ECJ). Two or more acts to be regarded as a single supply if they are so closely linked that they form a single indivisible economic supply: Where a transaction comprises a bundle of features and acts, then, whether it constitutes one single supply, or, two or more supplies should be determined taking into account the facts and circumstances of the case. There may be a single supply where some element(s) constitute the 'principal' supply, while others are 'ancillary'. Further, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the commercialization of medical services or the exorbitant prices charged but these facts are irrelevant as there is no denying the fact that the petitioners provide all types of medical services, that include surgical procedures which require administering drugs and may involve installing stents, implants etc. as an essential part of such procedures, like open heart surgery, angiography, knee surgery, hip replacement etc. "A medical procedure commences with a patient visiting a hospital to elicit a doctor's opinion regarding his medical condition and in case he requires a medical procedure, information regarding the particulars of the procedure and the cost. The patient is, thereafter, informed of the particulars of the medical procedure, the drugs, implants, stents etc. that are required for his treatment/medical procedure and the cost. The patient accepts the offer and opts for a particular procedure. Once having opted for a particular procedure, the choice of the drugs, implants, stents etc. would depend upon medical advice and only where, medically permissible, the choice of the patient. The question posed before us would, therefore, have to be further refined, nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. (Rate) Medicines, implants and consumables supplied in course of providing treatment to patients admitted in hospital, integral part of healthcare service extended to patient - Hence, supplies made in course of providing treatment to patients admitted in hospital undoubtedly naturally bundled in ordinary course of business Principal supply i.e. healthcare service is predominant element of composite supply and other supplies such as room, medicines, implants, consumables and incidental or ancillary to predominant supply - These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 9993 11, exempted as per entry at SI. No. 74 of Notification No. 12/2017-C.T. (Rate) - Section 2(30) of Central Goods and Services Tax Act, 2017. -The patients admitted to a hospital for treatment expect that proper diagnosis of the disease is made and treatment including appropriate medicines, surgical procedures if necessary, consumables and implants required along with proper diet is administered to them in the most efficient manner so that they can regain their health within the shortest possible time and resume their activiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a 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. 30. The term "clinical establishment" is defined in Para 2(s) of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017 as follows; "clinical establishment" means a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis 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. 31. That, there is no ambiguity in the fact that the whole process of examination of cancer patients is a treatment which is based on allopathic science of medicine. 32. That whether allopathy is recognized system of medicine in India or not was answered in erstwhile Educ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification no. 12 CGST Rate dated 28-06-2017. 35. That, the second condition that is required to be satisfied to fall under entry no. 74 of the said notification is that the Health Care services shall be provided by a clinical establishment as defined in para 2(s) of the Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017. 36. That Clinical establishment as defined in the said notification shall mean a hospital, nursing home, clinic, sanatorium or any other institution by, whatever name called, that offers services or facilities requiring diagnosis 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; 37. 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. 38. That, the applicant is providing services of Treatment of patients sufferin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mposite supply. F. FINDINGS, ANALYSIS & CONCLUSION: At the outset we would like to make it clear that the provisions of CGST Act and RGST Act are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the RGST Act. 1) We have carefully examined the statement of facts, supporting documents filed by the Applicant along with application, oral and written submissions made at the time of hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. We would like to discuss the submission made by applicant and will take up the above question for discussion one by one. 2) The applicant M/s Innovations Medi-research Private Limited (hereinafter referred to as "applicant") registered under Companies Act, 2013 located in the state of Rajasthan. Applicant have one unit M/s Asian Cancer Hospital located a B-1, Ashadeep Enclave-A, opposite Ashadeep Green Avenue, Nilay Kunj Road, Jagatpura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) So, we observe that there is no dispute that treatment of cancer Patients by the applicant is supply Sec. 7(1) of CGST Act, 2017 and falls under the ambit of GST health care services falling under SAC 999311. 6.3) The applicant supply of medicines and other procedures to inpatients admitted to hospital during treatment. Thus, applicant is involved in supply of service as well supply of goods i.e medicine along with taxable as well as exempt supply. 7) Now we would like to examine next, whether the supply made by applicant is exempt under entry 74(a) of notification no. 12/2017-CGST Rate dated 28-06-2017 and whether this is composite supply or not. 7.1) The relevant portion of Notification no. 12/2017-CGST Rate dated 28-06-2017 as amended is as under-: SI.No. Chapter, Section, Heading, 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 7.2) before moving forward, we wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant apart from AAR rulings are pre-GST era and applicant use portion of said pronouncements as per his suit will and none of pronouncement submitted by applicant in his favours squarely covers the present question of law in respect of applicability of GST. 7.5) We find that C.B.I & C has clarified vide Circular No. 27/01/2018-GST, dated 4-1-2018 that room rent in hospital is exempted. Further clarifications vide circular No. 32/06/2018-GST, (F.No. 354/17/2018 TRU Dt. 12.02.2018) issued based on the approval of 25th GST Council Meeting held on 18.01.2018, it was clarified that Food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. 7.6) In light of definitions as discussed above and clarification circulars on room rent and food supply by hospital to in-patients, we held that same principle should be applicable in case of dispensing of medicine to in- patient. We observe that the said supplies amounted to composite supply and eligible for exemption under category health care services". ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply. These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 999311, exempted as per entry at SI. No. 74 of Notification No. 12/2017-C.T. (Rate) 7.9) 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 held that These goods supplied to inpatients, component of composite supply, where principal supply i.e. healthcare services falling under SAC 9993 11, exempted as per entry at SI. No. 74 of Notification No. 12/2017-C.T. (Rate). In view of the foregoing, we rule as follows: - RULING (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Rajasthan Goods and Services Tax Act, 2017) Q.1 Whether the supply of medicines and other procedures during treatment inpatients admitted to hospital is a composite supply? Ans-1 Yes Q-2 Whether supply of medicines and other procedures to inpatients admitted to hospital for treatment is a composite supply, where principal supply is health care services falling under SAC 999311, which is exempted as per entry at SI. No. 74 of Notification No. 12/2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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