2018 (5) TMI 1737 - AAR - GST

Diagnostic services with counseling and therapy qualify as healthcare services attracting NIL GST rate under Notification 12/2017

AAR Karnataka ruled that the applicant qualifies as a clinical establishment providing health care services. The applicant offers diagnosis, pre-post ... Clinical establishment - health care services - diagnostic services - exempt supply / nil rated supplyClinical establishment - diagnostic services - The applicant qualifies as a clinical establishment - HELD THAT: - The Authority applied the definition of clinical establishment in Notification No.12/2017-Central Tax (Rate) which includes a place established to carry out diagnostic or investigative services. The applicant provides services requiring diagnosis - patient counselling, selection of relevant tests, sample collection, transmission of samples to overseas laboratories, receipt and communication of results, and post-test counselling - and operates within the Allopathy system recognised in India. The medical team engages in the complete diagnostic cycle and liaises with treating specialists, performing functions akin to referral/physician services and diagnostic facilitation. On that basis the applicant meets the criteria for being a clinical establishment under the notification. [Paras 8, 9]Applicant is a clinical establishment.Health care services - diagnostic services - The services provided by the applicant qualify as health care services - HELD THAT: - The Authority considered the definition of health care services in the same notification, which covers services by way of diagnosis, treatment or care for illness in a recognised system of medicine. The applicant's activities - providing sophisticated genetic and molecular diagnostic tests, counselling before and after testing, coordinating with clinicians, and facilitating diagnosis and prevention/management of diseases - fall squarely within the scope of services by way of diagnosis and related care. Given the applicant's involvement in the complete diagnostic and counselling cycle, the services are held to qualify as health care services under the notification. [Paras 10, 11]Services rendered by the applicant constitute health care services.Exempt supply / nil rated supply - health care services - The intra state supply of the applicant's services attracts NIL rate of central tax under Sl. No. 74 of Notification No.12/2017-Central Tax (Rate) - HELD THAT: - Having determined that the applicant is a clinical establishment and that its services qualify as health care services within the meaning of the notification, the Authority applied Sl. No. 74 of Notification No.12/2017-Central Tax (Rate) which exempts health care services provided by clinical establishments, authorised medical practitioners or para medics. Consequently, the intra state supply of the described services falls within the exempt (nil rated) category under that entry. [Paras 5, 12]Intra state supply of the applicant's services is nil rated under Sl. No. 74 of the notification.Final Conclusion: The Authority ruled that M/s Sayre Therapeutics Pvt. Ltd. is a clinical establishment, its services constitute health care services, and the intra state supply of those services is exempt / nil rated under Sl. No. 74 of Notification No.12/2017-Central Tax (Rate). Issues involved:1. Taxability of services provided by M/s Sayre Therapeutics Pvt. Ltd.2. Qualification as a clinical establishment.3. Classification of services as health care services.Analysis:Issue 1: Taxability of services provided by M/s Sayre Therapeutics Pvt. Ltd.The applicant, a healthcare company dealing with oncology and immunology therapy and diagnostics, sought an advance ruling claiming that their services are covered under health care services and hence qualify as nil rated supply. The applicant provides sophisticated tests related to oncology and auto immune disorders, collaborating with diagnostic companies to offer advanced genetic diagnostic tests. The Medical team is actively involved in the testing process, from patient counseling to sharing results and post-test counseling. The services provided by the applicant meet the criteria of health care services as per the relevant notification.Issue 2: Qualification as a clinical establishmentThe definition of a clinical establishment includes institutions offering services requiring diagnosis or treatment for illnesses in any recognized system of medicines. In this case, the applicant's services involve patient counseling, suggesting relevant tests, collecting samples, obtaining test results, and post-counseling. The medical team plays a crucial role in the diagnosis and treatment process, interacting with oncologists and pathologists, and providing services in the recognized 'Allopathy' system of medicine. Therefore, the applicant qualifies as a clinical establishment based on the services offered.Issue 3: Classification of services as health care servicesHealth care services are defined as services related to diagnosis, treatment, or care for various conditions in any recognized system of medicines. The applicant's services include diagnosis, pre and post-counseling, therapy, and prevention of diseases through relevant tests. The involvement of the medical team in the entire testing process supports the qualification of these services as health care services. Consequently, the ruling states that the applicant qualifies as a clinical establishment, and the services provided are classified as Health Care Services, attracting a nil rate of central tax as per the relevant notification.This detailed analysis of the judgment highlights the key aspects considered by the Authority for Advance Rulings in determining the taxability and classification of services provided by M/s Sayre Therapeutics Pvt. Ltd.