2024 (11) TMI 1328 - AAR - GST

Catering service provider to railway hospital liable for GST, cannot claim healthcare exemption under N/N. 12/2017

In Re: Bamapada Jana

The AAR, West Bengal ruled that a catering service provider supplying food to a railway hospital is liable for GST and cannot claim exemption under N/N. ... Exemption from GST - supply of food to all the inpatients - composite supply or not - Applicability of N/N. 12/2017 read with Sec. 8(a) of the GST Act - raising invoices by considering the services provided to the Central Hospital, South Eastern Railway, Garden Reach Road, Kolkata 700043 falling under the SAC 999311 - exempty as per entry N/N. 12/2017 Central Tax (Rate) dated 28.06.2017 or not. HELD THAT:- In the instant case, the applicant has entered into the agreement with the Central Hospital, South Eastern Railway for provide catering services by running the in-house kitchen of the hospital and for which the Central Hospital is liable to pay the consideration to the applicant. So, there can be no dispute that the applicant is supplying the services to the Central Hospital who is engaged in providing health care services to the patients. So, it is the Central Hospital and not the applicant who provides health care services. The Telengana Authority for Advance Ruling in the case of IN RE: M/S. NAVNEETH KUMAR TALLA, [2020 (8) TMI 104 - AUTHORITY FOR ADVANCE RULINGS, HYDERABAD TELANGANA] held that GST is payable on the service of supplying food and no exemption is provided as service is outsourced by the hospital and the applicant is not a clinical establishment. Composite supply thus is constituted with two or more taxable supplies which are naturally bundled and supplied in conjunction with each other. In the instant case, the Central Hospital, being a clinical establishment, provides food to the in-patients. Such food has been outsourced by the Hospital from the applicant. Therefore, food supplied to the in-patients as advised by the doctor/nutritionists constitutes a part of composite supply of health care services in the hand of the Central Hospital itself. Supply made by the applicant to the Central Hospital is a standalone service of supply of food and in no way can be considered as a composite supply of health care services. Issues Involved:1. Whether the supply of food to inpatients is considered an exempted supply under Notification No. 12/2017 read with Section 8(a) of the GST Act.2. Whether the applicant is correctly raising invoices by considering the services provided to the Central Hospital as exempted under SAC 999311 as per Notification 12/2017.Issue-wise Detailed Analysis:1. Exemption of Supply of Food to Inpatients:The applicant, a service provider engaged in catering services for a hospital canteen, sought an advance ruling on whether the supply of food to inpatients qualifies as an exempted supply under Notification No. 12/2017. The ruling examined the relevant notification, which provides exemptions for healthcare services offered by a clinical establishment, authorized medical practitioner, or paramedics. The definition of 'healthcare services' includes diagnosis, treatment, or care for illness, but excludes outsourced services.The authority noted that the Central Hospital is a clinical establishment providing healthcare services, including food to inpatients as part of a composite supply of healthcare services. However, the food service in question was outsourced to the applicant, who is not a clinical establishment. The ruling clarified that when food services are outsourced, they do not qualify as exempt under the healthcare services category. Therefore, the supply of food by the applicant to inpatients does not fall under the exemption provided by Notification No. 12/2017.2. Correctness of Invoicing and Tax Liability:The applicant contended that the services provided to the Central Hospital fall under SAC 999311 and are exempted as per the notification. The ruling analyzed the nature of the service agreement between the applicant and the hospital, concluding that the applicant's role was limited to preparing and supplying food as per the hospital's requirements. The ruling emphasized that the applicant's services were standalone and not part of a composite supply of healthcare services provided by the hospital.The authority referred to the definition of 'composite supply' under the GST Act, which involves naturally bundled services or goods supplied together. It concluded that the applicant's supply of food does not constitute a composite supply of healthcare services, as it is a separate service outsourced by the hospital. Consequently, the applicant is liable to pay tax on the supply of food to the hospital, and the invoicing practice considering the service as exempt under SAC 999311 is incorrect.Ruling:- The supply of food to inpatients by the applicant is not considered an exempted supply under Notification No. 12/2017.- The applicant is required to pay tax on the supply of food to the Central Hospital, and the invoicing practice considering the service as exempt is incorrect.