Kar AAR: No GST Levy on Exempted Healthcare Services Under SAC 999311

The Karnataka Authority of Advance Ruling (AAR) has passed a ruling that no GST shall be imposed on the composite supply of the healthcare services.

Here in this case the applicant is Messrs Saint Thomas Hospital that is a multi-specialty hospital that provides health care services Check out the brief details of GST impact on the healthcare industry in India. The researchers have commented on the impact of GST regime such as Implants, stents, providing medicines, surgical items, consumables and so on that are supplied through the channel of pharmacy to inpatients. Furthermore, the medicines and the surgical items are taken by the nursing staff from the inpatient pharmacy to the bed of the inpatients and are managed by the nursing staff itself. The inpatients are provided the following facilities:

• Stay facilities
• Dietary food
• Consumables
• Medicines
• Implants
• And so on

Those are required for treatment. The Central store of the above-mentioned hospital procures a stock of medicines, consumables, implants, and so on from the various suppliers and distributes it to its various outlets such as inpatient pharmacy, Outpatient Pharmacy, and Operation Theatre pharmacy that is based on the indent issued. It is worthwhile mentioning here that

• The inpatient pharmacy and the operation theatre pharmacy supplies the medicines, consumables, and implants only to inpatients
• Whereas an outpatient pharmacy that is attached to the hospital treats the medical prescription of the outpatients only

The applicants issue an invoice on inpatients at the point of time of discharge wherein the charges for various items like lab and diagnostic services, room rent, surgery, doctor’s consultation, diet charges, nursing charges, implants, medicines, and other surgical items are also included. Moreover, they supply food to them.

It is important to mention here that there are 2 categories of inpatients — some inpatients are under the supervision of dieticians, others inpatients are under the supervision of doctors.

The Applicant was Seeking an Advance Rulings on the Issues

• Whether the implants, medicines, stents, surgical items, and other consumables that are used during providing of the health care services to inpatients that are admitted to the hospital for
• Medical treatment or diagnosis or procedures shall be considered as “Composite Supply” of the health care services as per the GST (Goods and Services Tax) and consequently could claim an exemption as per Notification bearing Number 12/2017 of the Central Tax (Rate) that is dated 28.06.2017 and read along with Section 8(a) of the GST be claimed.

The Coram consisting of the Joint Commissioner of the Central Tax, Shiva Prasad along with Additional Commissioner of State Tax, Senil A.K.Rajan held the following judgment:

• The supply of the implants, medicines, stents, surgical items, and other consumables to the inpatients that are admitted to the hospital for either diagnosis or medical treatment constitutes a composite supply
• Whereas the Principal supply includes healthcare services falling under the domain of SAC 999311 that is exempted as per entry at SI bearing number 74 of
• The Notification Numbered 12/2017 of the Central Tax (Rate) is dated 28.06.2017.
• “The supply of food to inpatients admitted to the hospital for diagnosis, or medical treatment or procedures is a component of the composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at Sl No. 74 of Notification No.12/2017 Central Tax (Rate) dated 28.06.2017, the AAR ruled.”
• And the input tax credit (eligible) shall be determined as per the formula that is prescribed in Rule 42 of the CGST Rules, 2017