2021 (2) TMI 196 - AAR - GST

Medical Doctor Liable for GST Registration under CGST Act: Exemptions for Foreign Services

In Re: M/s. Dr. H.B. Govardhan

The ruling confirmed that the applicant, a medical doctor, is liable for GST registration under the CGST Act, subject to turnover limits. Services ... Levy of GST - requirement of registration - services rendered to the Hospitals / Laboratories/ Biobanks registered in United States of America (USA) and other countries includes export of intellectuals like clinical data completions, analysis, clinical opinion advisory consultation through Phone calls, Video Conference, Mails and other Electronic devices and the applicant is living in India and services rendered from the place of India - Heath Care Services - Medical Services and Paramedical Services (Part-time practicing in Clinic) rendered in India to the recipient from India. HELD THAT:- The applicant is a clinical establishment as it is a place established to carry out diagnostic or investigative or treatment services of diseases - it is clear that the services provided by the applicant are covered under clause (a) of Entry no. 74 of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and hence are exempt from tax under the CGST Act. Similarly, it is also exempted from tax under the KGST Act, 2017 and also under the IGST Act, 2017. Business Promotion Services provided by the applicant to the foreign companies - HELD THAT:- It is seen that the applicant is a registered person in India and the recipient of services is the foreign company. The applicant is getting the consideration in foreign currency from the foreign company to which he is providing services - The contract is examined with regard to the compensation and it is seen that the applicant is paid a monthly retainer of US $5000 and the applicant shall submit an invoice for each billing period on the last day of the corresponding month. In addition to this, the foreign recipient shall also pay the applicant funds for carrying out projects requested by the foreign company. Further, the foreign company shall reimburse for expenses incurred by the applicant and his agents or employees on behalf of the foreign company, including travel, lodging, meals for customer visits or conferences. These expenses should be pre-approved by the foreign company and the applicant shall submit expense reports and reasonable documentation on a periodic basis to the foreign company. In the instant case, the applicant is providing business promotion services on behalf of the foreign company, as an agent, by utilizing his medical expertise in organising collaborative projects, histopathological consulting and business development. Thus the applicant indubitably is committed through the agreement to facilitate the supply of services, in relation to establishment of Indian clinical centres in India, on behalf of the foreign company, as an agent, but not on his own account. Hence the impugned services squarely get covered under intermediary services. In the instant case, with regard to this service, the applicant who is the provider of services is located in India and the recipient of service, i.e. the foreign company, is located outside India. The payment for such service is received in foreign currency and the applicant and the foreign company are not related persons. The place of supply is India, in terms of Section 13 (8) of the IGST Act 2017 and hence the impugned services are not covered under export of services, as all the required conditions are not fulfilled. Applicable tax rate on the impugned services - HELD THAT:- The nature of services provided by the applicant are business promotion and management services, covered under SAC 9983 and are liable to tax at 9% CGST under entry no. 21 (ii) of the Notification No.11/2017- Central Tax (Rate) dated 28.06.2017 and 9% KGST under entry no.21(ii) of Notification (11/2017) No. FD 48 CSL 2017 dated 29.06.2017 and at 18% under IGST Act under entry 21(ii) of Notification No.08/2017- Integrated Tax (Rate) dated 28.06.2017 - The applicant is providing Business Promotion & Management Services, covered under SAC 9983 and are taxable as discussed at para 11 supra. The applicant being a service provider, as an intermediary, becomes a taxable person and hence is liable for registration in terms of Section 22(1) of CGST Act 2017. Therefore the applicant is liable for registration subject to threshold limit of turnover. It is observed that the applicant has already been registered under section 22 of the Central Goods and Services Tax Act, 2017 and also the Karnataka Goods and Services Act, 2017. Applicability of tax liability on the health care services - Medical Services and Para-medical services (part time practicing in Clinic) rendered in India to the recipient from India - HELD THAT:- It is clear that the diagnostic and treatment services provided by the applicant from his clinical establishment to any person in India would be exempt as per the entry 74 of Notification No.12/2017-Central Tax (Rate) dated 28.06.2017 and entry 74 of Notification (12/2017) No. FD 48 CSL 2017 dated 29.06.2017 and entry 77 of Notification No. 09/2017- Integrated Tax (Rate) dated 28.06.2017. Issues Involved:1. Eligibility for GST registration.2. Tax liability on services rendered to foreign entities (Hospitals/Laboratories/Biobanks in the USA and other countries).3. Tax liability on Health Care Services rendered in India.Issue-wise Detailed Analysis:1. Eligibility for GST Registration:The applicant, a medical doctor, provides health care services in India and consultancy services to foreign entities. The ruling confirms that the applicant is liable for GST registration under Section 22(1) of the CGST Act, 2017, subject to the threshold limit of turnover. The applicant is already registered under the CGST Act and KGST Act.2. Tax Liability on Services Rendered to Foreign Entities:The applicant provides two types of services to foreign entities:- Consultation Services in Diagnosis and Treatment of Illness: These services are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as they qualify as 'health care services' provided by a clinical establishment.- Business Promotion Services: These services, including organizing collaborative projects and business development for foreign companies, are classified as Business Promotion Services (SAC 9983). The applicant acts as an intermediary, facilitating services between foreign companies and Indian clinical centers. As per Section 13(8) of the IGST Act, 2017, the place of supply for intermediary services is the location of the supplier (India). Therefore, these services are taxable under GST and do not qualify as 'export of services' because the place of supply is in India.3. Tax Liability on Health Care Services Rendered in India:The diagnostic and treatment services provided by the applicant in India are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. This exemption applies to health care services offered by a clinical establishment, authorized medical practitioner, or paramedics.Ruling:1. The applicant is liable for registration under the GST Acts.2. There is no tax liability on diagnostic and treatment services rendered to foreign entities (Hospitals/Laboratories/Biobanks in the USA and other countries). However, business promotion services rendered as per the contract are taxable under GST.3. Diagnostic and treatment services, as well as part-time medical services provided in India, are exempt from GST.