Condition for qualifying as

[Mith Moh]

Whether ABC, a registered Limited Liability Partnership engaged in providing multidisciplinary rehabilitation services, including psychiatric, psychological, speech, and occupational therapies through licensed and certified professionals recognized under the Rehabilitation Council of India Act, 1992, and holding a valid registration from the Municipality under the Municipality (Registration of Private Hospitals and Paramedical Institutions) Rules, 1997 as a "Psychiatric Clinic," qualifies as a "medical establishment" for the purposes of exemption under Entry 74A of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017? Further, whether registration under the Clinical Establishments (Registration and Regulation) Act, 2010, or any corresponding State legislation, is a mandatory precondition for the applicant to be regarded as a medical establishment and avail the said exemption?

[Sadanand Bulbule]

ABC, though constituted as a Limited Liability Partnership, is engaged in providing multidisciplinary rehabilitation and mental healthcare services through qualified professionals recognised under the Rehabilitation Council of India Act, 1992, and is registered with the Municipality as a "Psychiatric Clinic" under the applicable municipal regulations governing private hospitals and paramedical institutions. Since Entry 74A of Notification No. 12/2017-Central Tax (Rate) grants exemption based on the nature of healthcare services and the functional character of the establishment, the essential requirement is that the institution should genuinely operate as a clinic or healthcare establishment providing diagnosis, treatment, therapy, rehabilitation or care through duly qualified professionals.

The notification does not prescribe registration under the Clinical Establishments (Registration and Regulation) Act, 2010, or corresponding State law as a mandatory condition for availing exemption. Therefore, where the entity is otherwise legally recognised and engaged in bona fide healthcare and rehabilitative services, absence of registration under the Clinical Establishments Act alone should not disentitle it from claiming exemption under Entry 74A.

[Mith Moh]

Sir,

As per Entry 74A of Notification No. 12/2017-Central Tax (Rate), exemption is granted to:

(i) medical establishment

(ii) educational institutions

(iii) rehabilitation centres established by Central government, State Government or Union Territory or an entity registered under Section 12AA [or 12AB] of the Income-tax Act, 1961

Here ABC doesn't fall under (ii) and (iii). However, “Medical Establishment” is not defined in the said act or any allied acts. “Clinical Establishment” has been defined in the said notification. What would the definition of Medical Establishment be and the qualifying criteria for ABC to function as a Medical Establishment?

[Raam Srinivasan Swaminathan Kalpathi]

Dear Querist

I am of the opinion that ABC LLP or whatever the name, is eligible for exemption under Not.12/2017-CT(Rate) Entry 74A as the said service provider satisfies the definition of clinical/ medical establishment. Also, to the best of my knowledge the said Notification does not mandate registration with the Clinical Establishments (R and R) Act, 2010 as a prerequisite for availing exemption under Entry 74A. Nevertheless, the exemption is available only to the extent of the said services and does not extend to consultancy, training, wellness, cosmetics, etc.

[Kashish Gupta]

From above we understand ABC is registered as a "Psychiatric Clinic" under the Municipality (Registration of Private Hospitals and Paramedical Institutions) Rules, 1997 and provides multidisciplinary rehabilitation services including psychiatric, psychological, speech, and occupational therapies through professionals recognised under the Rehabilitation Council of India Act, 1992. The definition of "clinical establishment" under rule 2(s) of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 is broad and inclusive. It covers any hospital, nursing home, clinic, sanatorium or any other institution, by whatever name called, that offers services or facilities requiring diagnosis or treatment or care for illness, injury, deformity, or abnormality in any recognised system of medicines in India. The services rendered by ABC squarely fall within the meaning of diagnosis, treatment, and care for illness and abnormality. The registration held by ABC under the Municipal Rules sufficiently establishes its character as a clinic within the meaning of the said definition. Registration under the Clinical Establishments (Registration and Regulation) Act, 2010 is not prescribed as a mandatory precondition under the notification, and the definition does not restrict the term "clinical establishment" to entities registered under that Act alone. Any valid registration recognising the entity as a clinical establishment for the purpose of providing healthcare services would suffice.

Therefore, ABC qualifies as a "clinical establishment" within the meaning of the notification and is entitled to exemption under Entry 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 in respect of health care services provided by it.

AI Summary

Clinical establishment exemption under GST depends on functional healthcare services, not mandatory registration under the Clinical Establishments Act.
A registered limited liability partnership providing multidisciplinary rehabilitation and mental healthcare services through recognised professionals, and registered with the municipality as a psychiatric clinic, is treated as a clinical establishment for exemption purposes under Notification No. 12/2017-Central Tax (Rate). The decisive factor is the functional character of the institution as a healthcare provider, not its corporate form or registration label. Registration under the Clinical Establishments Act, 2010, is not a mandatory precondition, and the exemption is confined to healthcare services, not consultancy, training, wellness, or cosmetics.