In-patient Health Care Supplies Exempt from CGST & SGST

In Re: M/s. CMC Vellore Association

In Re: M/s. CMC Vellore Association - 2020 (32) G. S. T. L. 601 (A. A. R. - GST - T. N.) Issues Involved:
1. Whether the medicines, drugs, stents, consumables, and implants used in providing health care services to in-patients are considered as 'Composite Supply' of health care services under GST and can exemption under Notification No. 12/2017 be claimedRs.
2. Tax liability on medicines supplied to in-patients through pharmacy.

Issue-Wise Detailed Analysis:

1. Composite Supply of Health Care Services:

The applicant, a multi-specialty tertiary care hospital, provides comprehensive health care services to both in-patients and out-patients, including stay facilities, medicines, consumables, implants, dietary food, and other necessary surgeries/procedures. The hospital contends that medicines, consumables, and implants used during the course of providing health care services are naturally bundled and essential for the treatment of in-patients.

Section 2(30) of the CGST Act defines 'composite supply' as a supply made by a taxable person consisting of two or more taxable supplies of goods or services or both, 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 the health care service, which includes the provision of medicines, consumables, and implants.

The ruling refers to Circular No. 32/06/2018-GST, which clarifies that food supplied to in-patients as advised by doctors is part of the composite supply of health care and not separately taxable. Similarly, the supply of medicines and allied items to in-patients is considered part of the composite supply of health care services. The hospital cannot provide health care services without these essential items, making them naturally bundled with health services.

The 'Explanation to classification of services' under SAC 9993 covers 'Human Health Services,' including inpatient services aimed at curing, restoring, and/or maintaining the health of a patient. This includes medical, pharmaceutical, paramedical, rehabilitation, nursing, and laboratory services provided under the direction of medical doctors, classifiable under SAC 999311.

2. Tax Liability on Medicines Supplied to In-Patients:

The ruling refers to Sl. No. 74 of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 and Sl. No. 74 of Notification No. II(2)/CTR/532(d-15)/2017, which exempt health care services provided by a clinical establishment, an authorized medical practitioner, or para-medics. The definition of 'health care services' includes any service by way of diagnosis, treatment, or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicines in India, provided by a clinical establishment.

The applicant hospital qualifies as a 'Clinical Establishment,' and the health care services it provides, including the supply of medicines, implants, and consumables, are exempt from CGST and SGST as per the aforementioned notifications. The supply of medicines and allied items through the pharmacy to in-patients is part of the composite supply of health care services and is not separately taxable.

Ruling:

1. Medicines, drugs, stents, consumables, and implants used in the course of providing health care services to in-patients admitted to the hospital for diagnosis, or medical treatment or procedures are considered a composite supply of In-Patient Healthcare Service.
2. The supply of inpatient health care services by the applicant hospital, 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, is exempted from CGST and SGST as per Sl. No. 74 of the above notifications respectively.