Health care service exemption denied where accommodation dominated a bundled naturopathy package and no outpatient care was provided.

Exemption for health care services under Entry 74 of Notification No. 12/2017-Central Tax (Rate) was considered to apply only when the supply is made by a clinical establishment, authorised medical practitioner or paramedics. The package here combined naturopathy treatment, accommodation and food, but the facility was not treated as a clinical establishment because it did not provide outpatient care and the stay was mandatory for at least seven days. As accommodation formed the principal supply and the other elements were ancillary, the bundled service did not squarely fall within the exempt category. The claimed exemption was therefore not available.

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Issues: Whether the appellant's integrated naturopathy, accommodation and food package qualified as "health care services" by a "clinical establishment" and was therefore exempt under Entry 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The exemption under Entry 74 applies only to health care services supplied by a clinical establishment, authorised medical practitioner or paramedics. The appellant was neither an authorised medical practitioner nor paramedics, so the dispute turned on whether it was a clinical establishment. The Authority examined the nature of the facility in common and industry parlance and noted that the appellant did not provide outpatient care, insisted on a minimum seven-day stay, and structured its package primarily around accommodation with room charges forming the major part of consideration. The treatment, food and stay were found to be naturally bundled, but accommodation was treated as the principal supply and the other elements as ancillary. The Authority also applied the rule that exemption notifications must be construed strictly and the burden lies on the claimant to show that the case squarely falls within the exemption.

Conclusion: The appellant was not treated as a clinical establishment supplying exempt health care services, and the claimed exemption was not available.

Final Conclusion: The appeal failed and the advance ruling denying exemption was sustained.

Ratio Decidendi: An exemption for health care services is available only where the claimant clearly establishes that its supply squarely falls within the notified class of services, and a package dominated by accommodation with no outpatient care does not qualify as exempt health care service by a clinical establishment.

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