Diagnostic and counselling services can qualify as health care services and clinical establishment functions for tax exemption.

Diagnostic and counselling activities integrated with patient testing, sample handling and medical coordination in a recognised system of medicine can amount to a clinical establishment and health care services. The applicant's functions were treated as diagnostic establishment activity in Allopathy, and its pre- and post-counselling, therapy support and assistance in selecting tests and treatment pathways were held to fall within the health care services exemption. On that basis, the intra-state supply of such diagnostic and allied services was held eligible for NIL rate of central tax under the relevant exemption entry.

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Issues: (i) Whether the applicant qualifies as a clinical establishment; (ii) Whether the services provided by the applicant qualify as health care services and are eligible for exemption under Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate).

Issue (i): Whether the applicant qualifies as a clinical establishment.

Analysis: The definition of clinical establishment in clause 2(s) of Notification No. 12/2017-Central Tax (Rate) covers an institution or place that offers diagnosis or related services in a recognised system of medicines in India, including diagnostic or investigative services of diseases. The applicant's activities included patient counselling, suggesting relevant tests, collecting samples, obtaining results, and coordinating with medical specialists for diagnosis and treatment recommendations. These functions were held to be part of a diagnostic establishment operating in the recognised system of Allopathy.

Conclusion: The applicant qualifies as a clinical establishment.

Issue (ii): Whether the services provided by the applicant qualify as health care services and are eligible for exemption under Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate).

Analysis: Clause 2(zg) of Notification No. 12/2017-Central Tax (Rate) defines health care services as diagnosis, treatment or care for illness or other specified conditions in a recognised system of medicines in India. The applicant's services were found to consist of diagnosis, pre- and post-counselling, therapy support, sample handling, and assistance in determining suitable tests and treatment pathways. On that basis, the services were treated as health care services falling within the exemption entry.

Conclusion: The services provided by the applicant qualify as health care services and attract NIL rate of central tax under Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate).

Final Conclusion: The ruling grants exemption treatment to the applicant's intra-state supply of diagnostic and allied healthcare services, holding the applicant to be a clinical establishment and the services to be health care services eligible for nil-rated tax.

Ratio Decidendi: Diagnostic and counselling activities integrated with patient testing and medical coordination, when carried out in a recognised system of medicines, can constitute clinical establishment functions and health care services for exemption purposes.

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