2021 (12) TMI 1416 - AAR - GST

Classification of Oxygen Pipeline Installation Services for Government Hospitals under GST

In Re: M/s. Goel Medico

The Authority for Advance Ruling (AAR) classified the applicant's activity of supplying, installing, testing, and commissioning oxygen pipeline systems in ... Classification of supply - Installation services of parts and equipment for the supply or conduct of oxygen and other gases used in hospital, homes etc; and connection of other gas-operated equipment done for Government hospital covid care ward - to be classified under SAC 995464 or not - HELD THAT:- In the instant case the applicant has informed that they are engaged in the activity of supply installation testing and commissioning of oxygen pipelines system in Government Hospitals and it has been their contention that the said activity is classifiable under SAC 995464 and they have sought ruling according the tax rate for the said SAC 995464 viz. installation service of parts and equipment for the supply or conduct of oxygen and other gases used in hospital homes etc; Connection of other gas-operated equipment done for Government Hospital covid care ward - From the documents placed, it is evident that the activity of the applicant is a supply consisting of two or more taxable supplies of goods or services or both and its combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, supply and installation of medical gas pipe line being the principal supply. The activity of the applicant falls under Services Accounting codes (SAC Codes) 995464 which includes installation service of parts and equipment for the supply or conduct of oxygen and other gases used in hospital homes etc. connection of other gas operated equipment attracting 18% GST. Notification 05/2021-Central Tax (Rate), Dated 14th June, 2021 provides for concessional tax rate exemption to the goods specified in column (3) of the Table below, falling under the tariff item, sub-heading, heading or Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), in other words the aforesaid Notification provides exemption to goods viz. only to the Covid related items specified therein in the table and not to the work contract services in which the applicant is engaged in. Thus this notification is found not to be any help to the applicant. Issues Involved:1. Classification of services provided by the applicant.2. Applicability of GST rate on the services.3. Availability of GST exemption for the services provided.Issue-wise Detailed Analysis:1. Classification of Services Provided by the Applicant:The applicant, engaged in the supply, installation, testing, and commissioning of oxygen pipeline systems in government hospital Covid Care Wards, sought a ruling on the classification of their services under SAC 995464. The Authority for Advance Ruling (AAR) confirmed that the applicant's activities fall under SAC 995464, which includes installation services of parts and equipment for the supply or conduct of oxygen and other gases used in hospitals, homes, etc., and the connection of other gas-operated equipment.2. Applicability of GST Rate on the Services:The AAR examined the provisions of the CGST Act, 2017, particularly Sections 7(1) and 2(30), to determine the nature of the composite supply. The applicant's services were identified as a composite supply, where the supply and installation of medical gas pipelines are the principal supply. According to Section 8 of the CGST Act, 2017, the tax liability of a composite supply is determined based on the principal supply. Consequently, the AAR concluded that the services provided by the applicant attract an 18% GST rate (9% CGST and 9% SGST).3. Availability of GST Exemption for the Services Provided:The applicant contended that their services should be exempt under Notification No. 05/2021-Central Tax (Rate) dated 14th June 2021, which provides concessional rates for Covid-19 relief supplies. The AAR reviewed the notification and clarified that it applies to specific goods listed in the table, such as medical-grade oxygen, Tocilizumab, Amphotericin B, Remdesvir, and other Covid-19 related items. The notification does not extend to work contract services like those provided by the applicant. Thus, the AAR determined that the notification does not offer any exemption for the applicant's services.Order:The AAR ruled that the applicant's activity of supplying, installing, testing, and commissioning oxygen pipeline systems in government hospitals is classified under SAC 995464 and is subject to an 18% GST rate (9% CGST and 9% SGST). The notification cited by the applicant does not provide any exemption for their services.Ruling:The activity of the applicant merits classification under SAC 995464 and is liable to an 18% GST (9% CGST & 9% SGST).