The Andhra Pradesh authority for advance ruling (AAR) headed by Mr D. Ramesh, Member (State Tax) and Mr RV Pradhamesh Bhanu, Member (Central Tax) ruled that the procurement and drug distribution, Medicines, and additional surgical equipment by Andhra Pradesh Medical Services and Infrastructure Development Corporation (APMSIDC) does not come under pure service and not eligible for tax exemption.
The petitioner, Andhra Pradesh Health and Medical Housing and Infrastructure Development Corporation (APHMHIDC), was renamed Andhra Pradesh medical services and infrastructure development corporation would be a society that was made by the State Government of Andhra Pradesh to release the functions concerned to the public health and 100% of the equity and control ruled by the government of Andhra Pradesh itself.
The petitioner seeks AAR to explain the procurement and distribution of drugs, medicines, and additional surgical equipment by APMSIDC on the grounds of the government without any value addition and without any profit or loss without having the intention to perform the business in the amounts to supply beneath section 7 of CGST/SGST Act and attracts exemption as per Entry 3 or 3A of Notification 12/2017 Central Tax.
The petitioner, the corporation is entitled to the definition of the “Government Entity/Government authority” as provided in Notification 12/2017 Central tax (rate). The services provided by the corporation would relevant to relate to public health, one of the items listed under entry No: 26 of the Eleventh Schedule of the Constitution of India comes under Article 243G.
Hence the establishment charges obtained via the corporation are qualified for exemption under entry 3 or 3A of GST Notification No. 12/2017. According to entry 3, the services will essentially be ‘Pure Services’. Towards the case, the principal activity is the procurement of goods and the ancillary activity would be the service element of managing and tracking the supply, where 2% establishment charges would be obtained by the petitioner. Hence there would be a clear-cut engagement of goods and services in the instant transactions and would be nothing else, a pure service.
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The council ruled that the procurement and distribution of drugs, medicine, and additional surgical equipment through the APMSIDC on the grounds of the government without any value addition and without any profit or loss, no purpose of performing business in the same amounts to supply under Section 7 of CGST/SGST Act and the establishment charges received from the State Government by APMSIDC shall not qualified for exemption as per Entry 3 or 3A of Notification 12/2017 Central Tax.
