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TMI Blog2024 (2) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the above, it can be said that the Applicant is providing health care services subjected to the condition that room charges are not exceeding Rs. 5000 per day to a person receiving health care services. The medicines, consumables and foods supplied in the course of providing treatment to the patients admitted in the hospital is an integral part of the health care service extended to the patients - Hence the room charges, medicines, consumables and food supplied in the course of providing treatment to the patients admitted in the hospital(in-patient) are undoubtedly naturally bundled in the ordinary course of business and the principal supply is health care service which is the predominant element of the composite supply - the food supplied to the in-patients as advised by the doctor/nutritionists is a part of composite supply of healthcare and not separately taxable. Whether GST is applicable on money retained by the applicant? - HELD THAT:- From Para 5(2) of Circular No. 32/06/2018-GST dated: 12-02-20218, it is clear that the entire amount charged by the hospital from the patients including the retention money and the fee/payments made to the doctors etc. is towards the he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-2017 read with Section 8(a) of GST be claimed? iii. Retention Money: Whether GST is applicable on money retained by the applicant? iv. Whether GST is exempt on Fees collected from nurses and psychologists for imparting practical training? 4. Admissibility of the application : The question is about the "Determination of the liability to pay tax on any goods or services or both", which is covered under Sections 97(2)(e) of the CGST Act 2017. 5. BRIEF FACTS OF THE CASE: The applicant furnishes some facts relevant to the issue. 5.1 The applicant has stated that they are engaged in the activity of providing health care services. The applicant also runs a hospital in the name of Spandana Pharma. 5.2 The applicant states that they provide the following type of services: A. Psychiatry:- 1. All Emergencies in psychiatry 2. Electroconvulsive therapy (BPCST) 3. Narco Analysis (Hypnotherapy) 4. Behavior therapy 5. Child guidance clinic 6. Psychotherapy and Counselling 7. Psychometric, I.Q. tests and others. 8. Relaxation therapy 9. Mental Retardation Clinic 10. Occupational therapy and Daycare Services 11. De-addiction to Drugs, Alcohol and Smoking 12. Mari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f illness. (ii) Where the out patients and in-patients have already been treated earlier, previous prescriptions and their results are also assessed. (iii) On the basis of above, patients are examined by a psychiatrist who assesses the severity of illness, dependence of patient on drugs and his ability to withdraw from drugs. (iv) On the basis of such examination, psychiatrist prescribes medicines and the duration for which the medicines are required to be consumed. (v) Details of substance used by the patient and other parameters are also captured in the patient's file. (vi) Applicant has maintained pharmacy, clinical laboratory, X-ray and scanning facilities, ambulance service, Dietary services etc. 4) (i) The applicant submits that on the admission of patient as in-patient a general consent form duly signed by the caretaker of the patient is taken. (ii) A billing card is maintained recording all the details of visits and diagnosis by Doctors, various types of treatment including electric shock given to patients. (iii) Doctor's daily progress report containing details of prescriptions of tests and medicines and other care to be undertaken is maintained. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r pregnancy in any recognized 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. (v) The term "clinical establishment" is defined in Para 2(s) of the Services Exempt Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017 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 investigate services of diseases. (vi) The Explanatory Notes to the Scheme of Classification of Services (SCS) under GST pertaining to Health Care services is reproduced below; SCS 9993 Human Health and Social Care Services SCS 9993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d food supplied in the course of providing treatment to the patients admitted in the hospital is undoubtedly naturally bundled in the ordinary course of business and the principal supply is health care service which is the predominant element of the composite supply and the other supplies such as room, medicines, consumables and food are incidental or ancillary to the predominant supply. (viii) On the basis of the facts and the provisions of law as discussed above, the applicant's understanding is that the applicant is a clinical establishment as defined in Para 2(s) of the Services Exempt Notification No. 12/2017 Central Tax (Rate) dated 28-06-2017 and the supply of medicines, surgical items, food and other consumables to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a composite supply where the principal supply is healthcare services falling under SCS 999311 which is exempted as per entry at SI. No. 74 of Services Exempt Notification No. 12/2017 Central Tax (Rate) dated 28.06.2017. 7) The applicant has placed reliance on the Advance Ruling on similar fact delivered by various Authorities for Advance Ruling. (i) That in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at SI. No. 74 of Services Exempt Notification No. 12/2017-C.T. (Rate). 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 activities, [paras 8.7, 8.8, 8.91] (iii) That in case of KIMS Health Care Management Ltd reported in 2018 (18) GSTL 831 (AAR GST) it was held by the AAR authority that Composite supply - Health care services, Medicines, consumables and implants used in the course of providing health care services to in-patients for diagnosis or treatment hospital or clinical establishment - Indispensable items of treatment and naturally bundled in ordinary course of business with health care services - Clarification in C.B.I. & C. Circular No. 27/01/2018 - GST, dated 4-1-2018 that room rent in hospital is exempted - Also clarifications issued based on approval of 25th GST Council Meeting (F.No. 354/17/2018-TRU, dated 12-2-2018) that food supplied to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealth care services to the inpatients are ancillary to it and does not itself become principal supply. The tax liability on a composite supply shall be the rate of tax applicable on principal supply. In the case of health care, the principal supply of health care services is exempted from payment of tax and hence the supplies of other items ancillary to the principal supply of health care services are also exempt from payment of tax. The applicants relies on the decision of advance ruling authorities in the following cases: (a) Advance Ruling Order No. KER/16/2018 dated 19.09.2018 in the case of M/s. Ernakulam Medical Centre Pvt. Ltd. which was upheld by Appellate Authority for Advance Ruling, Kerala vide Order No. AAR/03/2018 dated 14.12.2018 (b) Advance Ruling Order No. KER/47/2019 dated 12.04.2019 in the case of M/s. Kindorama Health Care Pvt. Ltd. (c) Advance Ruling Order No. KER/57/2019 dated 05.09.2019 in the case of M/s. Baby Memorial Hospital Ltd. Thus the applicant is of the understanding that supply of food to in-patients admitted to the hospital for diagnosis or medical treatment or procedure is a component of the composite supply where the principal supply is hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of completing course in recognized Educational Institutions. What Nursing students and Psychologists study in Educational institutions is theory. They need practical training to gain knowledge. ii. Mental health is often comorbid with many physical health problems such as Cancer, HIV, AIDS, Diabetes, Tuberculosis among others. The presence of substantial comorbidity has serious implications for identification, treatment and rehabilitation of affected patients. When Nursing students and Psychologist receive mental health training on successful completion of their course in the hospital run by the applicant they can attend to mental health and neurological illness of patients with mental disorders as well as the mental health needs of those suffering from infectious and chronic diseases. This will lead to better health outcomes. Equipping students of nursing and psychologists with mental health skills promotes a more holistic approach to patient care and ensure both improved diction and prevention of mental disorders. iii. Thus, the applicant is of the understanding that training imparted to Nurses and Psychologists forms part and parcel of health care service. Hence GST is exempt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CU)] having room charges exceeding Rs. 5000 per day to a person receiving health care services; (b) services provided by way of transportation of a patient in an ambulance, other than those specified in (a) above. Nil Nil 12. The term 'health care services' has been defined in para 2(zg) of the above-mentioned notification as below: (zg) "health care services" means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or 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; 12.1 The term 'clinical establishment' has been defined in para 2(s) of the above-mentioned notification as below: (s) "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, they will be admitted to hospital as inpatient. The patients admitted to a hospital undergo proper diagnosis of the disease / illness and then treatment which includes appropriate medicines, surgical procedures which need necessary consumables required along with proper diet. These are provided to the in-patient so that they can regain their health within the shortest possible time and resume their activities. Therefore, the medicines, consumables and foods supplied in the course of providing treatment to the patients admitted in the hospital is an integral part of the health care service extended to the patients. Hence the room charges, medicines, consumables and food supplied in the course of providing treatment to the patients admitted in the hospital(in-patient) are undoubtedly naturally bundled in the ordinary course of business and the principal supply is health care service which is the predominant element of the composite supply. 13.2 Para 5(3) of Circular No. 32/06/2018-GST dated: 12.02.2018 clarifies about levy of GST on food supplied to the patients and the same is reproduced below: SI.No. Issues Clarification 5. Is GST leviable in following cases : (3) Food ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/payments made to the doctors etc. is towards the healthcare services provided by the hospitals to the patients and is exempt. From the above it is clear that the entire amount charged by the hospital from the patients including the retention money and the fee/payments made to the doctors etc. is towards the healthcare services provided by the hospitals to the patients and is exempt. 15. Now we proceed to answer the fourth question i.e., whether GST is exempt on fees collected from nurses and psychologists for imparting practical training. The Applicant states that they are providing practical training to nursing students and psychologists who are about to complete their course in recognised educational institutions. They allow trainee nurses and psychologists to interact with patients and try to understand the reason for their mental disorder and neurological illness. At the end of the training the Applicant conducts a test and issues certificate to all. The Applicant is of the understanding that training imparted to Nurses and Psychologists ..... X X X X Extracts X X X X X X X X Extracts X X X X
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