Charitable society running medical institute must register for GST despite exempt education and healthcare services due to taxable ancillary activities

The AAAR Maharashtra ruled that a charitable society operating a medical institute and hospital must register under CGST Act despite providing primarily exempt educational and healthcare services. The authority held that the society's activities constitute "business" under the expanded CGST definition and qualify as "supply" under section 7(1)(a). While medical education services attract nil GST rate and healthcare services are exempt, ancillary activities like property rental and scrap sales are taxable supplies to different recipients, not composite supplies. Since the society provides both exempt and taxable services with aggregate turnover exceeding threshold limits, GST registration is mandatory under section 22(1) of CGST Act, 2017.

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Issues Involved:

1. Whether the appellant, a Charitable Society, engaged in imparting Medical Education, is engaged in "business" under the CGST Act, 2017.
2. Whether the appellant is liable for GST registration under Section 22 of the CGST Act, 2017, or can remain outside the purview of registration under Section 23.
3. Taxability of fees and other charges received from students and patients.
4. Taxability of the cost of medicines and consumables recovered from OPD patients.
5. Taxability of nominal charges received from patients under an "Unparallel Health Insurance Scheme."
6. Taxability of nominal amounts received for essential facilities like banking, parking, refreshment, and disposal of waste.

Issue-Wise Detailed Analysis:

1. Engagement in "Business":
The Appellate Authority examined the definition of "business" under Section 2(17) of the CGST Act, 2017, which includes any trade, commerce, profession, or similar activity, whether for pecuniary benefit or not. The authority concluded that the appellant's activities of imparting medical education and providing health care services fall under "profession" and thus constitute "business" under the GST law. Despite the appellant's charitable status and previous exemption under the Maharashtra VAT regime, the broader definition of "business" under the CGST Act encompasses their activities.

2. Liability for GST Registration:
The authority held that since the appellant's activities are considered "business," they are liable for GST registration under Section 22(1) of the CGST Act, 2017, provided their aggregate turnover exceeds the prescribed threshold. The appellant's contention that their activities do not constitute taxable supply was rejected.

3. Taxability of Fees and Charges:
The fees and other charges received from students and recoupment charges from patients are considered "outward supply" under Section 2(83) of the CGST Act, 2017. The supply of educational services and health care services, against which these charges are collected, are exempt under entries at SI. No. 66 and SI. No. 74 of Notification No. 12/2017-C.T. (R) dated 28.06.2017.

4. Cost of Medicines and Consumables:
The cost of medicines and consumables recovered from OPD patients, along with nominal charges for diagnostic services, are part of a "composite supply" of health care services. These are ancillary to the principal supply of health care services and qualify for exemption under SI. No. 74 of Notification No. 12/2017-C.T. (R) dated 28.06.2017.

5. "Unparallel Health Insurance Scheme":
The charges collected under the "Unparallel Health Insurance Scheme" are considered advances towards the provision of health care services. These charges are exempt from GST under SI. No. 74 of Notification No. 12/2017-C.T. (R) dated 28.06.2017. The authority disagreed with the MAAR's classification of these charges under residuary entry at SI. No. 35 of Notification No. 11/2017-C.T. (R) dated 28.06.2017.

6. Essential Facilities and Disposal of Waste:
The nominal amounts received for providing space for facilities like banking, parking, and refreshment are considered separate and independent supplies, taxable at 18% under item (iii) of entry at SI. No. 16 of Notification No. 11/2017-C.T. (R) dated 28.06.2017. The charges received for the disposal of waste are also considered independent supplies, attracting GST at the applicable rate under Notification No. 01/2017-C.T. (R) dated 28.06.2017.

Conclusion:
The Appellate Authority concurred with the MAAR's ruling on questions (i), (ii), and (iii)(b), and modified the ruling on questions (iii)(a), (iii)(c), and (iii)(d) to clarify the taxability of various charges and activities undertaken by the appellant. The appellant is liable for GST registration and compliance, with specific exemptions applicable to their core educational and health care services.

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