Health care supplies for inpatients deemed composite supply under SAC 999311. Exempt from CGST, SGST.

The medicines, consumables, and implants used in providing health care services to in-patients by the applicant are considered a composite supply of Inpatient Services under SAC 999311. The supply of health care services or inpatient services by the applicant is exempt from CGST and SGST as per relevant notifications.

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Issues Involved:
1. Classification of medicines, consumables, and implants used in the course of providing health care services to in-patients.
2. Eligibility for exemption under the category "Health Care Services."

Detailed Analysis:

Issue 1: Classification of Medicines, Consumables, and Implants
The applicant, a polyclinic providing health care services to both out-patients and in-patients, sought an advance ruling on whether the medicines, consumables, and implants used in the course of providing health care services to in-patients for diagnosis or treatment would be considered as "Composite Supply" and thus eligible for exemption under "Health Care Services."

The applicant argued that the supply of medicines, consumables, and implants is incidental and naturally bundled with the predominant supply of health care services. They cited the case of KIMS Health Care Management Ltd., where the Kerala Advance Ruling Authority ruled that such supplies are naturally bundled and considered as "composite supply," eligible for exemption under health care services.

The applicant provided detailed documentation, including admission forms, billing cards, doctors' progress reports, drug charts, investigation charts, pharmacy bills, and discharge summaries, to support their claim that these items are used in the course of providing comprehensive treatment to in-patients.

The Authority examined the submissions and noted that the hospital provides a comprehensive treatment package, including room rent, nursing care, diagnostics, and treatment, which cannot be completed without the use of medicines, consumables, and implants. Therefore, these items are naturally bundled with the health care services and form a composite supply.

Issue 2: Eligibility for Exemption under "Health Care Services"
The Authority referred to Section 2(30) of the CGST Act and TNGST Act, which defines "composite supply" as a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services, which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, with one of them being the principal supply.

In this case, the principal supply is health care services, as the in-patients are admitted to the hospital for diagnosis and treatment, not merely to purchase medicines or consumables. Therefore, the supply of medicines, consumables, and implants is a composite supply of health services.

The Authority also referenced Circular No. 32/06/2018-GST, which clarifies that health care services provided by hospitals, including the supply of food to in-patients as part of the treatment, are considered a composite supply and are exempt from GST.

Furthermore, the "Explanation to classification of services" under SAC 9993, specifically SAC 999311, includes inpatient services provided by hospitals under the direction of medical doctors, which comprise medical, pharmaceutical, paramedical, rehabilitation, nursing, and laboratory services. These services are aimed at curing, restoring, and maintaining the health of a patient and are considered a composite supply.

The relevant notifications, SI No 74 of Notification no 12/2017-C.T. (Rate) dated 28.06.2017 and Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017, exempt health care services provided by a clinical establishment, an authorized medical practitioner, or para-medics from CGST and SGST.

Ruling:
1. Medicines, consumables, and implants used in the course of providing health care services to in-patients by the applicant are considered a composite supply of Inpatient Services classifiable under SAC 999311.
2. The supply of health care services or inpatient services by the applicant, as defined in Para 2(zg) of Notification no 12/2017-C.T. (Rate) dated 28.06.2017 and Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017, is exempt from CGST and SGST as per SI No 74 of the above notifications.

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