Company healthcare services to hospitals through outsourcing arrangements not exempt from GST under Notification 12/2017

The AAR Haryana ruled that healthcare services provided by a company to another hospital through outsourcing arrangements are not exempt from GST under Notification No. 12/2017. The applicant company sought exemption for gastroenterology services provided at the recipient hospital's premises, where both parties would share patient charges. The AAR held that since the service is rendered between two companies rather than directly to patients, it constitutes a taxable supply under GST. The authority emphasized that healthcare exemptions are intended to benefit patients directly, not commercial arrangements between corporate entities.

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Issues Involved:
1. Eligibility for seeking an advance ruling.
2. Exemption of fee/charges received by M/s ARPK Healthcare from M/s Asian Hospital under GST.
3. Exemption of fee/charges for healthcare services received by M/s Asian Hospital under GST.

Comprehensive, Issue-Wise Detailed Analysis:

1. Eligibility for Seeking an Advance Ruling:
The applicant must satisfy the conditions under the Central Goods and Services Tax Act, 2017 (CGST Act, 2017) and Haryana Goods and Services Tax Act, 2017 (HGST Act, 2017). The provisions of both Acts are pari materia. Section 97(2) of the CGST Act, 2017 allows an Advance Ruling on questions about the applicability of a notification, determination of tax liability, registration requirements, and whether an action constitutes a supply of goods or services. The proviso to Section 98(2) states that if the question is pending or decided in any proceedings, the application may be rejected. The applicant confirmed that the issue is neither pending nor decided in any proceedings and paid the applicable fee of Rs. 10,000.

2. Exemption of Fee/Charges Received by M/s ARPK Healthcare from M/s Asian Hospital Under GST:
M/s ARPK Healthcare Private Limited provides healthcare services through authorized medical practitioners to patients of M/s Asian Hospital. The applicant contended that these services are exempt from GST under entry number 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, which exempts healthcare services by a clinical establishment, authorized medical practitioner, or paramedics. However, the authority found that M/s ARPK is not registered as a clinical establishment under the Clinical Establishment (Registration/Regulation) Act, 2010. The supply of services through an agreement to M/s Asian Hospital does not fall under the category of healthcare services (SAC 9993) and is not eligible for exemption under Sr. No 74 of Notification No. 12/2017-CT(R) dated 28 June 2017. The authority concluded that the contract to supply human resources personnel to M/s Asian Hospital is a taxable event.

3. Exemption of Fee/Charges for Healthcare Services Received by M/s Asian Hospital Under GST:
M/s Asian Hospital provides healthcare services to patients through doctors hired from M/s ARPK. The entire amount charged by M/s Asian from patients, including fees paid to doctors, is towards healthcare services and is exempt under GST. However, the outsourcing of infrastructure by M/s Asian Hospital to M/s ARPK is not covered under the exemption definitions. The authority ruled that the services provided by M/s Asian Hospital are exempt, but the outsourcing of infrastructure to M/s ARPK is not exempt under Notification No. 12/2017-CT(R).

Conclusion:
The scope of supply under the GST Act is vast and covers all aspects of the nature of supplies. The supply between the applicant and M/s Asian Hospital is taxable under the Act. The claim that services rendered by the applicant to M/s Asian Hospital are covered under Notification No. 12/2017-Central Tax (Rate) is not sustainable.

Ruling:
1. Fee/charges received by M/s ARPK from M/s Asian are not exempt under GST.
2. Fee/charges for healthcare services received by M/s Asian are exempt under GST, except for services mentioned under heading 9993 clause no. 31A as per notification no. 03/2022-CT(R) dated 13.07.2022.

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