Inpatient Healthcare Services Exempt from CGST under Composite Supply Rule

The supply of medicines, consumables, and implants used in providing healthcare services to in-patients, including room rent, food, and doctor fees, constitutes a "Composite Supply." This composite supply is eligible for exemption under the category "Healthcare Services" as defined in the relevant notification. Therefore, the supply of inpatient healthcare services by the hospital is exempt from CGST.

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Issues Involved:
1. Whether the supply of medicines, consumables, and implants used in the course of providing healthcare services to in-patients constitutes a "Composite Supply."
2. Whether such composite supply is eligible for exemption under the category "Healthcare Services."

Issue-Wise Detailed Analysis:

Issue 1: Composite Supply
The applicant, a multi-specialty hospital, provides comprehensive healthcare services to both out-patients and in-patients, including stay facilities, medicines, consumables, surgical implants, dietary food, and other necessary items for treatment. The hospital charges in-patients for a package that includes room rent, nursing care, diagnostics, and other medical services under the directions of doctors. The term "composite supply" is defined under Section 2(30) of the CGST Act, 2017, as a supply made by a taxable person to a recipient 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, one of which is a principal supply.

In this case, the hospital provides a composite supply of health services, where the principal supply is the healthcare service itself, and the supply of medicines, consumables, and implants is incidental to the main service. This view is supported by Circular No.32/06/2018-GST dated 12.02.2018, which clarifies that healthcare services provided by clinical establishments include food supplied to in-patients as part of the composite supply and are not separately taxable.

Issue 2: Eligibility for Exemption
Healthcare services provided by a clinical establishment or an authorized medical practitioner or paramedics are exempt under Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The definition of "healthcare services" includes any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality, or pregnancy in any recognized system of medicines in India, and includes services by way of transportation of the patient to and from a clinical establishment.

The applicant hospital qualifies as a clinical establishment and provides healthcare services, including the supply of medicines, implants, consumables, rooms, and food, which are exempt from CGST as per the mentioned notification. This interpretation is further supported by various rulings from different Authorities for Advance Ruling, which consistently held that the supply of medicines, consumables, and other allied items to in-patients as part of healthcare services constitutes a composite supply and is exempt from GST.

Conclusion:
The supply of medicines, consumables, and implants used in the course of providing healthcare services to in-patients, along with allied services such as room rent, food, and doctor fees, constitutes a "Composite Supply." This composite supply is eligible for exemption under the category "Healthcare Services" as defined in Para 2(zg) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. Thus, the supply of inpatient healthcare services by the applicant hospital is exempt from CGST as per Sl. No. 74 of the above notification.

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