Health care service exemption fails where therapeutic supply is not proved to be from a recognised medical system.

Exemption for health care services under Entry 74 of Notification No. 12/2017-Central Tax (Rate) applies only where the supply is rendered by a clinical establishment in a recognised system of medicine and consists of diagnosis, treatment or care within that system. The applicant's plant-based therapeutic protocol was not shown to be exclusively prepared under authoritative Ayurvedic formulae, nor was it established that the persons administering it were duly qualified Ayurvedic practitioners. On that material, the supply did not qualify as exempt health care service. As the exemption failed, GST liability continued and the applicant was required to remain registered.

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Issues: (i) Whether the applicant's phytotherapy-based supply qualified as exempt health care services by a clinical establishment under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate). (ii) Whether the applicant was required to remain registered under the GST law after the claimed exemption.

Issue (i): Whether the applicant's phytotherapy-based supply qualified as exempt health care services by a clinical establishment under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate).

Analysis: The exemption applied only to health care services rendered by a clinical establishment in a recognised system of medicine in India. The definition of recognised system of medicine was taken from the clinical establishments law, and the supply had to be shown to be diagnosis, treatment, or care in such system. The applicant described a plant-based therapeutic protocol and claimed it was Ayurvedic in nature, but did not establish that the preparations were manufactured exclusively according to authoritative Ayurvedic formulae or that the persons administering them were authorised medical practitioners in Ayurveda. On the material placed, the applicant failed to show that its activity amounted to health care services by a clinical establishment in a recognised system of medicine.

Conclusion: The applicant's supply was not exempt under Entry No. 74.

Issue (ii): Whether the applicant was required to remain registered under the GST law after the claimed exemption.

Analysis: Since the supply was held not to be exempt health care service, the liability to pay GST continued and the basis for ceasing registration did not arise.

Conclusion: The applicant was required to remain registered.

Final Conclusion: The ruling denied exemption for the applicant's supply and maintained the continuing GST registration obligation.

Ratio Decidendi: A therapeutic supply is exempt as health care service only when the provider proves that it is rendered by a clinical establishment in a recognised system of medicine and that the persons administering the treatment are duly qualified within that system.

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