Healthcare as the predominant composite supply keeps government-operated clinical establishment services exempt from GST despite intermediary payment arrangements.

Operating and managing Government Urban Health and Wellness Centres, Urban Ayushman Arogya Mandirs and Polyclinics is characterised as a naturally bundled composite supply whose predominant element is healthcare delivery. Establishing facilities, deploying medical and paramedical staff, and providing diagnosis, treatment, preventive and curative care, diagnostics, medicines, referrals and public-health interventions constitute healthcare services through a clinical establishment. Administrative, monitoring, reporting and operational obligations are ancillary and do not convert the supply into facility-management or support services. Payment routed through a Government-appointed implementing agency from Government grants does not alter the substance of services supplied to the public. The services are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate).

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Issues: Whether the operation and management of Government Urban Health and Wellness Centres, Urban Ayushman Arogya Mandirs and Polyclinics constitutes exempt healthcare services provided by a clinical establishment under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

Analysis: The contractual scope required the operator to establish and run healthcare facilities, deploy medical and paramedical personnel, and deliver diagnosis, treatment, preventive and curative care, diagnostics, medicines, referrals and public-health interventions. These activities formed a naturally bundled composite supply whose predominant and essential character was healthcare delivery. The administrative, operational, monitoring and reporting obligations were ancillary to that principal supply and could not be artificially segregated to classify the arrangement as facility-management or support services.

Analysis: The executing agency only implemented and administered the Government programme and routed payments from Government grants. Its role, and its liability to make payment, did not alter the actual nature of services supplied through the clinical establishments to members of the public. Healthcare services remain characterised by their substance and dominant purpose, notwithstanding that consideration is paid through a Government-appointed implementing agency rather than directly by patients.

Conclusion: The services are healthcare services supplied by a clinical establishment and are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017.

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