2021 (7) TMI 543 - AAR - GST

GST Exemptions for Healthcare Packages and Outpatient Services: Summary

In Re: M/s. Malankara Orthodox Syrian Church Medical Mission Hospital

The ruling determined that for inpatients, the supply of medicines, implants, and supplies under a healthcare package is exempt from GST. If medicines and ... Liability of GST - Healthcare services - supply of medicines, implants and other items to patients undergoing treatment as inpatients and outpatients in different situations - exemption as per Entry at SI No. 74 of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. Offering a package to the inpatients covering the treatment including all required medicines and other supplies for a consolidated amount that is pre-fixed - HELD THAT:- The combination of goods and /or services included in the supply are naturally bundled in the ordinary course of business and hence it is a composite supply of which the principal supply is healthcare services and the other supplies are only incidental or ancillary to the supply of healthcare services. Therefore, the supply of medicines, implants, and other items to the inpatients admitted to the hospital for treatment as per the package offered by the applicant is a composite supply where the principal supply is healthcare services falling under SAC 999311 which is exempted as per entry at SI No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Offering a package to the inpatients covering the treatment for a consolidated amount that is pre-fixed - package does not include medicines, implants and other supplies which will be separately billed according to the type, brand and quantity of the items as chosen by the inpatient as per the choice made available to them - HELD THAT:- The combination of the goods and / or services included in the supply are not bundled by the applicant and they are supplied as distinct and clearly identifiable individual supplies and the value of such individual supplies are separately determined according to the choice exercised by the inpatient. Hence it cannot be considered as a composite supply and the supply of each of the individual goods and / or services shall be individually liable to GST at the rates as applicable on the basis of the classification of such supplies under the GST Tariff. This view is supported by the clarification of the CBIC in Issue SI No.2 of Circular No. 47/21/2018 - GST dated 08.06.2018 that the taxability of supply would have to be determined on a case to case basis looking at the facts and circumstances of each case and where a supply involves supply of both goods and services and the value of such goods and services supplied are shown separately, the goods and services would be liable to tax at the rates as applicable to such goods and services separately - the healthcare services supplied by the applicant as per the package is exempted as per entry at SI No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and the supply of medicines, implants and other items that are not included in the package and which are separately billed shall attract GST at the rate applicable to such items. Package is not applicable and the treatment, medicines and other supplies are charged separately according to the type, brand and quantity of items as per choice of the patient - HELD THAT:- The combination of the goods and / or services included in the supply are not bundled by the applicant and they are supplied as distinct and clearly identifiable individual supplies and the value of such individual supplies are separately determined according to the choice exercised by the inpatient as made available. Hence it cannot be considered as a composite supply and the supply of each of the individual goods and / or services shall be individually liable to GST at the rates as applicable on the basis of the classification of such supplies - the treatment provided by the applicant falls under the scope of healthcare services and is exempt from GST as per entry at SI No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. Situation where the percentage of value of medicines and other supplies represents major portion of the total expenditure billed to a patient - HELD THAT:- The question is general and vague in nature in as much it does not disclose whether the different combinations of the goods and services involved in the supply are bundled and supplied together or they are supplied as clearly distinguishable and identifiable supplies and the value of such supplies are separately determined or not. Hence the question cannot be answered for want of sufficient information. Liability of GST - supply of medicines, implants and other items to patients undergoing treatment as outpatients - patients are not being admitted in hospital but the hospital is providing treatment to those patients at the hospital as an outpatient - HELD THAT:- In such cases the services provided or the combination of services provided in the course of the treatment of the patients as described above clearly fall within the scope of healthcare services as defined in Para 2 (zg) of the Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 and is exempted from GST as per entry at SI No. 74 of the said notification - example includes Dialysis, dressing, chemotherapy, minor surgeries, other treatments and procedures that require no admission and preadmission services like causality. Medicines and other supplies are issued to outpatients based on the prescription of their Doctors for consumption at home and follow-up - HELD THAT:- In such cases the patients are consulting the doctors of the applicant and the patients are given advice and prescription of medicines and allied items by the Doctor. The patients have the freedom to procure the medicines and allied items either from the pharmacy run by the hospital or from other independent medicine dispensing outlets. There is no difference whether it is procured from the pharmacy run by the hospital or from independent medicine dispensing outlets, as in both cases the medicines and allied items are dispensed on the basis of prescription. Therefore, the supply of medicines and allied items by the pharmacy run by the hospital can only be treated as an individual supply of medicine and allied items and therefore is liable to GST at the rates applicable for each such item as per the GST Tariff Schedule - the consultation services rendered by the applicant falls within the purview of healthcare services and accordingly is exempted from GST as per entry at SI No. 74 of N/N. 12/2017-Central Tax (Rate) dated 28.06.2017. Issues Involved:1. GST liability on supply of medicines, implants, and other supplies to inpatients.2. GST liability on supply of medicines, implants, and other supplies to outpatients.Detailed Analysis:1. GST Liability on Supply of Medicines, Implants, and Other Supplies to Inpatients:1.1. Package Covering Treatment, Medicines, and Supplies for a Consolidated Amount:The ruling states that this is a composite supply where the principal supply is healthcare services. The supply of medicines, implants, and other items to inpatients under this package is exempt from GST as per entry at SI No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.1.2. Package Covering Treatment but Medicines and Supplies Billed Separately:In this situation, the healthcare services provided under the package are exempt from GST. However, the supply of medicines, implants, and other items that are billed separately will attract GST at the applicable rates as per the GST Tariff Schedule.1.3. No Package, Medicines, and Supplies Charged Separately:Here, each supply is treated as a distinct and identifiable individual supply. Therefore, each supply of goods and/or services will be liable to GST at the rates applicable based on their classification.1.4. Medicines and Supplies Represent Major Portion of Total Expenditure:The question is deemed vague and cannot be answered due to insufficient information.2. GST Liability on Supply of Medicines, Implants, and Other Supplies to Outpatients:2.1. Treatment Provided to Outpatients Without Admission:Services provided in this context, such as dialysis, dressing, chemotherapy, minor surgeries, and other treatments, fall within the scope of healthcare services as defined in Para 2 (zg) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. These services are exempt from GST.2.2. Medicines and Supplies Issued Based on Doctor's Prescription for Home Consumption:The supply of medicines and allied items by the hospital's pharmacy to outpatients is treated as an individual supply of goods. These supplies are liable to GST at the rates applicable for each item as per the GST Tariff Schedule. For returned or replaced medicines, the hospital can adjust the GST paid by issuing a credit note as per Section 34 of the CGST Act and Rule 53 of the CGST Rules, 2017.RULING:1. Inpatients:1.1. Package Covering Treatment, Medicines, and Supplies:This is a composite supply with healthcare services as the principal supply, exempt from GST.1.2. Package Covering Treatment but Medicines and Supplies Billed Separately:Healthcare services under the package are exempt, but separately billed medicines and supplies attract GST.1.3. No Package, Medicines, and Supplies Charged Separately:Each supply is individually liable to GST at applicable rates.1.4. Major Portion of Expenditure on Medicines and Supplies:Question is too vague to answer due to lack of information.2. Outpatients:2.1. Treatment Without Admission:Such services fall under healthcare services and are exempt from GST.2.2. Medicines and Supplies for Home Consumption:These are treated as individual supplies and are liable to GST at applicable rates. Adjustments for returned or replaced items can be made via credit notes.This detailed analysis preserves the legal terminology and significant phrases from the original text while providing a comprehensive understanding of the judgment.