Naturopathy center in luxury resort provides composite supply services, not standalone healthcare, making GST applicable under SAC 9963

The AAR ruled that a naturopathy center operating within a luxury resort provides composite supply services rather than standalone healthcare services. The center's wellness programs including naturopathy and yoga therapies are bundled with accommodation, food, and recreational activities as part of resort packages. The accommodation service was determined to be the principal supply since therapy cannot be administered without mandatory stay, making other services ancillary. Consequently, the services fall under SAC heading 9963 (accommodation services) rather than 9993 (healthcare services), rendering the healthcare exemption under entry 74 of notification 12/2017 inapplicable. GST is therefore leviable on the composite supply.

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Issues Involved:
1. Classification of services provided by the applicant.
2. Applicability of GST exemption under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, Entry No. 74.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Applicant:

The applicant, a partnership firm running a resort named "Aahana-The Corbett Wilderness" and an independent unit "Aahana Naturopathy Centre," sought an advance ruling on whether the services provided by the Naturopathy Centre qualify for GST exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate). The services include various health care services in the form of nature cure and yoga therapies.

The applicant argued that their services fall under the Service Accounting Code (SAC) 9993, which includes human health services such as homeopathy, Unani, Ayurveda, naturopathy, and acupuncture. They contended that their unit is registered under the Clinical Establishment Act, 2010, and the services are provided by a qualified practitioner, thus fulfilling the conditions for health care services exemption.

2. Applicability of GST Exemption:

The concerned officer opposed the applicant's claim, stating that the services provided by the applicant are more aligned with luxury wellness packages rather than health care services aimed at diagnosing or treating specific ailments. The officer emphasized that the services marketed by the applicant are for relaxation and general well-being, which do not qualify for the exemption under Entry No. 74.

The Authority for Advance Ruling examined the applicant's website and marketing materials, which highlighted luxury wellness packages, including accommodation, food, and various leisure activities. The authority concluded that the services provided by the applicant are composite supplies, where accommodation is the principal supply, and other services, including naturopathy and yoga, are ancillary.

Under Section 8 of the CGST Act, 2017, a composite supply is treated as a supply of the principal supply. Therefore, the services provided by the applicant were classified under sub-heading 996311 (Room or unit accommodation services provided by Hotels, Inn, Guest House, Club, and the like) rather than under Heading 9993 (human health services).

Conclusion:

The Authority for Advance Ruling ruled that the applicant's services do not qualify for the GST exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The services provided by the applicant are classified under sub-heading 996311, and therefore, the exemption applicable to services under Heading 9993 does not apply to the applicant.

Ruling:

The applicant, M/s Corbett Nature Reserves (M/s. Aahana Naturopathy Centre), is not eligible to get the benefit of Entry No. 74 of exemption Notification No. 12/2017-Central Tax (Rate), dated 28-6-2017.

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