Naturopathy Centre Services Classified as Accommodation, Not Healthcare, Making Them Ineligible for GST Exemption

The Appellate Authority upheld an earlier ruling that a Naturopathy Centre's services could not be classified under SAC Heading 9993 for GST exemption. Though the appellant claimed to provide healthcare services qualifying for exemption under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate), the Authority determined that accommodation was the principal supply, with naturopathy services being merely ancillary. Consequently, all services were classified under the accommodation services sub-heading and subject to applicable GST, as per the provisions governing composite supplies under the CGST Act.

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Issues:
Classification of services under SAC Heading 9993 for exemption eligibility.

Analysis:
The appeal was filed against an Advance Ruling Order regarding the eligibility of a nature reserve to benefit from an exemption under Notification No. 12/2017-Central Tax (Rate). The applicant sought clarification on whether their Naturopathy Centre could be classified under SAC Heading 9993 for exemption eligibility. The Authority for Advance Ruling had initially ruled that the applicant was not eligible for the exemption due to the classification of their services under a different sub-heading.

During the personal hearing, the applicant's representative reiterated their appeal submissions, emphasizing the healthcare services provided by the Naturopathy Centre. The discussion focused on whether the Naturopathy Centre could be considered an independent clinical establishment and whether the appointment of an authorized medical practitioner supported their claim for exemption eligibility under Entry No. 74 of the exemption notification.

The analysis delved into the legal provisions related to composite supply, principal supply, and tax liability determination for composite or mixed supplies under the CGST Act. It was established that the accommodation service provided by the applicant was the principal supply, with Naturopathy services being ancillary to it. Therefore, all services related to or in addition to accommodation services were deemed liable to GST applicable to accommodation services.

Ultimately, the Appellate Authority upheld the original ruling, stating that the services provided by the applicant, including Naturopathy, were to be classified under the sub-heading applicable to accommodation services. The decision was based on the predominant nature of the accommodation service and its relation to other services provided by the applicant.

This detailed analysis of the issues involved in the judgment showcases the application of legal provisions and considerations in determining the eligibility of the applicant for exemption under the relevant notification.

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