Appellate authority denies GST exemption for diagnostic imaging services under Notification No. 12/2017-CT(R)

The appellate authority upheld the ruling of the Advance Ruling Authority (AAR) that the diagnostic imaging services provided by the appellant do not qualify for GST exemption under Notification No. 12/2017-CT(R). The authority determined that the services are considered input services for hospitals and do not meet the criteria of "healthcare services" provided by a "clinical establishment" as defined in the notification. Despite the appellant's arguments regarding the nature of their services and compliance issues, the appeal was dismissed, affirming the denial of the GST exemption.

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Issues Involved:
1. Whether the provisioning of diagnostic imaging services qualifies for exemption from GST under Notification No. 12/2017-CT(R), S. No. 74.
2. Whether the services provided by the appellant are considered "healthcare services."
3. Whether the appellant qualifies as a "clinical establishment."
4. Whether the services provided by the appellant are input services for hospitals.
5. Compliance with the stipulated time period for passing the ruling.

Issue-wise Analysis:

1. Exemption from GST under Notification No. 12/2017-CT(R), S. No. 74:
The appellant contested the ruling by the Advance Ruling Authority (AAR) which denied GST exemption for diagnostic imaging services under Notification No. 12/2017-CT(R). The AAR ruled that the services provided did not qualify for the exemption as they were not considered "healthcare services" under the notification.

2. Definition of "Healthcare Services":
The appellant argued that their diagnostic imaging services fall under "healthcare services" as defined in clause (zg) of the Exemption Notification, which includes services by way of diagnosis. The appellant emphasized that their services are imperative for a comprehensive and accurate diagnosis of medical conditions, thus qualifying as healthcare services. They supported their argument with definitions from the National Cancer Institute and various dictionaries, and cited judicial precedents that support a broad interpretation of tax exemptions in line with trade parlance.

3. Qualification as a "Clinical Establishment":
The appellant claimed to be a clinical establishment under the definition provided in the notification, which includes entities that offer diagnostic services. However, the appellate authority found that the appellant's services are not provided by a clinical establishment but are input services for hospitals that further provide diagnostic services to patients.

4. Nature of Services as Input Services:
The appellate authority held that the appellant's services are input services for the hospitals, which use the diagnostic images provided by the appellant for further diagnosis by authorized medical practitioners. The authority emphasized that the services provided by the appellant are not directly to the patients but to the hospitals, which then use these services to provide healthcare to patients. The authority distinguished between healthcare services provided directly to patients and input services provided to hospitals.

5. Compliance with Stipulated Time Period:
The appellant argued that the AAR failed to pass the ruling within the stipulated 90 days as required under Section 98(6) of the CGST Act. The ruling was served on the appellant after 15 months, which the appellant claimed invalidated the ruling. However, the appellate authority did not find this argument sufficient to overturn the ruling.

Conclusion:
The appellate authority dismissed the appeal, upholding the AAR's ruling that the services provided by the appellant are input services and do not qualify for GST exemption under Notification No. 12/2017-CT(R). The authority concluded that the appellant's services do not meet the criteria of "healthcare services" provided by a "clinical establishment" as defined in the notification.

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