Composite health care services in recognised systems of medicine can be exempt when diagnosis, treatment, medicines and in-patient care are bundled together.

Services involving diagnosis, treatment, medicines and allied in-patient care in a recognised system of medicine can qualify as exempt health care services when they are naturally bundled and supplied together in the ordinary course of business. The applicant's provision of Ayurveda, Naturopathy and Yoga-based care under qualified supervision satisfied the definition of a clinical establishment because it offered diagnosis, treatment and care for illness through recognised systems of medicine. On that basis, the composite supply of diagnosis, treatment, medicines, consumables and related in-patient services was treated as exempt health care services under the notification.

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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 exempt under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017.

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

Analysis: The definition of clinical establishment under Clause 2(s) of Notification No. 12/2017-Central Tax (Rate) covers institutions that offer services or facilities requiring diagnosis, treatment or care for illness, injury, deformity, abnormality or pregnancy in a recognised system of medicines in India. The applicant was shown to provide diagnosis, treatment and care through Ayurveda, Naturopathy and Yoga under supervision of qualified doctors.

Conclusion: The applicant qualifies as a clinical establishment.

Issue (ii): Whether the services provided by the applicant qualify as health care services exempt under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017.

Analysis: The definition of health care services under Clause 2(zg) covers any service by way of diagnosis, treatment or care for illness in a recognised system of medicines in India. The services included diagnosis, treatment, medicines, consumables and related in-patient care, all of which were found to be naturally bundled and supplied in conjunction with each other in the ordinary course of business. Such composite supply fell within the exemption entry for health care services.

Conclusion: The services provided by the applicant qualify as exempt health care services.

Final Conclusion: The applicant's in-state supply of the composite package of diagnosis, treatment, medicines and allied in-patient services is exempt from tax under the stated notification.

Ratio Decidendi: Where diagnosis, treatment, medicines and allied in-patient care are naturally bundled and supplied together in a recognised system of medicine, the entire bundle constitutes exempt health care services.

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