TaxTMI 
TaxTMI 
2018 (12) TMI 474
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....ient (OP) services. The Company is also engaged in supply of medicines (pharmacy) to in-patients and out-patients. It also operates Restaurant / Canteen services in its premises which is used for supplying food and other eatable items to its patients and their attendants. 3. The question on which advance ruling is sought is as follows: (a) "Whether two or more supplies of goods or services which are naturally bundled in which principal supply is exempt and others are taxable, can be treated as composite supply and if yes, principal supply being exempt supply, can the said composite supply be treated as exempt supply or the same cannot be treated as composite supply? (b) If not treated as composite supply, is registered person allowed to claim input tax credit of tax paid on procurement of capital goods, inputs and input services related to both taxable supply and exempted supply?" 4. The applicant furnishes some facts relevant to the stated activity: a. The applicant states that he is a private limited company and is an international healthcare group operating a chain of modern hospitals across Asia. The Company is currently operating across six different states havi....
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....it covers only such supplies which are subject to GST and not the exempt supplies. Therefore, in the instant case, though two or more supplies are naturally bundled, i.e. healthcare services, being exempt supply, the same cannot be treated as composite supply. 5. Considering the above conjecture, the applicant is discharging GST liability on supply of medicines and food provided to both in-patients and out-patients as a separate line item which are clearly identifiable on the face of the invoice and availing input tax credit on inputs used in providing such supply of medicines. Further, no credit of input tax charged on goods and services used in supplying the food/ any other article for human consumption or drinks is availed pursuant to the Notification No.46/2017-Central Tax (Rate) dated November 14th, 2017. With regard to healthcare services, since this being an exempt service under GST, the applicant is not charging GST on the value of such healthcare services. Simultaneously, the applicant is not availing input tax credit if GST paid on inputs or input services or capital goods used for providing such exempted (Healthcare) services. He has attached a sample copy of invoice ....
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.... supplies to in-patients and out-patients, can be construed as Composite supply? a. If yes, is supply of pharmacy goods, consumables and canteen services forms part of such composite supplies, not liable to tax? b. Valuation of IP pharmacy, if the same is treated as part of composite supply? 2) the said supply cannot be construed as a composite supply, is it correct to discharge GST liability only on supply of medicine, consumables and food that are supplied in conjunction with healthcare services and simultaneously availing input tax credit on GST paid on inputs and input services procured for providing supply of medicines and consumables? 3) the input tax credit of GST paid on inputs, input services and capital goods which are attributable to healthcare services shall need to be reversed as the same are towards exempted services? 4) the GST paid on inputs, input services and capital goods that are used for both healthcare services and other taxable services (i.e. supply of medicines and consumables other than food, as there is a specific restriction for not availing input tax credit for supply of food or article of human consumption or drink) shall be a....
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....ax Act, and includes non-taxable supply;" Since the healthcare services are exempt from tax under section 11, the same are exempt supplies. But the definition of taxable supplies includes those supplies of goods which are leviable to tax and chosen to be exempted under section 11 and hence the exempt supplies also fall under the category of taxable supplies and hence the supply of goods and services supplied by the applicant company in conjunction with the healthcare services fall under the definition of "composite supply" as the services of supply of food and medicines to the patients are as advised by the doctor or nutritionists. But in case where the supply of food is not as advised by the doctor or nutritionists and is supplied to the patients, then such supply of food cannot be treated as "naturally bundled" supplies and supplies made in conjunction with each other and hence are separate supplies and needs to be treated not as composite supplies But as far as medicines supplied to the inpatients are concerned, they form part of the healthcare services supplied to the concerned patients and hence are part of the composite supplies of health care services where the principal ....
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....plied at a single price. (c) In case where supplies of medicines, food and drinks and healthcare services are not supplied for a single price and form separate and independent supplies, then such supplies are to be taxed separately at the rates applicable to such supply of goods or services. Here the valuations of the individual supplies are to be valued on the basis of the provisions of section 15 of the CGST Act. 11.5 Sub-section (1) of section 16 of the Central Goods and Services Act 2017 reads as under: "(1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person." Since the applicant is using the inputs and input services in the course or furtherance of his business, credit of such tax paid on such inward supplies can be claimed by him. 11.6 Sub-section (2) of section 17 of the Central Goods and Services Act 2017 reads ....