2021 (11) TMI 396 - AAR - GST

Tax Implications for Charitable Society Providing Medical Education

In Re: M/s. Kasturba Health Society

In Re: M/s. Kasturba Health Society - TMI Issues Involved:1. Whether the applicant, a Charitable Society engaged in imparting Medical Education, is engaged in business under the CGST Act, 2017 and MGST Act, 2017.2. Whether the applicant is liable for registration under Section 22 of the CGST Act, 2017 and MGST Act, 2017 or can remain outside the purview of registration under Section 23.3. Whether fees and charges received from students and patients constitute 'outward supply' and their classification under Notification 12/2017.4. Whether the cost of medicines and consumables recovered from OPD patients qualifies as 'composite supply' for exemption under healthcare services.5. Whether nominal charges received from patients for an 'Unparallel Health Insurance Scheme' qualify for exemption under educational and/or healthcare services.6. Whether nominal amounts received for making space available for essential facilities and disposal of wastage qualify for exemption under educational and/or healthcare services.Detailed Analysis:Issue 1: Engagement in BusinessThe applicant, a Charitable Society engaged in imparting Medical Education, is considered to be engaged in business under the CGST Act, 2017 and MGST Act, 2017. The definition of 'business' under Section 2(17) includes activities without pecuniary benefit, covering medical education as a profession. Therefore, the applicant's activities are covered under the scope of 'business.'Issue 2: Liability for RegistrationThe applicant is liable for registration under Section 22 of the CGST Act, 2017 and MGST Act, 2017. The applicant's supply of medical education services is exempt under Sr. No. 66 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. However, if the applicant undertakes taxable supplies (e.g., renting of property, restaurant service), they must obtain GST registration.Issue 3: Fees and Charges as 'Outward Supply'The fees and other charges received from students and recoupment charges from patients do not constitute 'outward supply' under Section 2(83) of the CGST Act, 2017 and MGST Act, 2017. These fees are considered 'consideration' for the supply of services. The fees from recognized courses are exempt under Sr. No. 66, and recoupment charges from patients are exempt under Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate).Issue 4: Composite Supply for ExemptionThe cost of medicines and consumables recovered from OPD patients, along with charges for diagnostic services, qualifies as 'composite supply' under healthcare services and is exempt from tax under Sr. No. 74 of Notification No. 12/2017-Central Tax (Rate).Issue 5: Health Insurance SchemeThe nominal charges received from patients for an 'Unparallel Health Insurance Scheme' are taxable at 18% under the residuary entry. The applicant does not hold a license from the Insurance Regulator, so the service is not covered under insurance services but under 'other services' (Heading 9997).Issue 6: Essential Facilities and Disposal of WastageNominal amounts received for making space available for essential facilities (e.g., Banking, Parking, Refreshment) are taxable at 18% under real estate services (Heading 9972). Food supplied to in-patients and staff is part of composite healthcare supply and is not taxable, but food supplied to non-admitted patients or visitors is taxable at 5%. The disposal of wastage was not specified, so this part was not answered.Conclusion:The applicant is engaged in business and is liable for registration. Fees and charges from students and patients are exempt from tax, while charges for the health insurance scheme and renting space are taxable. Essential facilities provided to in-patients and staff are exempt, but other supplies are taxable.