TaxTMI 
TaxTMI 
TaxTMI 
2020 (10) TMI 810
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....vices relating to Health Care Services which are in the nature of diagnostic and treatment services. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions: 1. Whether input tax credit is required to be restricted on medicines supplied to patients admitted in hospital? 2. Whether input tax credit is required to be restricted on medicines supplied to patients treated as out-patients? 3. Whether input tax credit is required to be restricted on medicines supplied to other than inpatients and out-patients? 4. Whether input tax is required to be restricted on supply of food and beverages to the patients admitted in hospital? 4. Admissibility of the application : The applicant filed the instant application, in relation to the admissibility / restriction of input tax credit. Further the applicant have sought advance ruling in respect of the questions on the issues covered under Section 97(2)(d) of the CGST Act 2017 respectively and hence the application is admitted. 5. Applicant's interpretation of law : The Applicant submits their interpretation of law as under: 5.1 The applicant, with regard to the question 1 relating to wh....
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....pplicant submitted that though mere supply of medicine does not fall under health care services, however on conjoint reading of definition, "composite supply" and "principal supply" it is understood that, supply of medicine is ancillary supply and health care service is predominant supply, both the supplies are naturally bundled with each other, hence fall under "composite supply", therefore supply of medicines to the patients admitted in the hospital during the health care services is exempt from payment of tax under the GST Law. 5.6. The applicant submitted that where outward supply is exempt from tax, the applicant is not eligible to claim input tax credit in terms of section 17 of the Act, which deals with apportionment of credit and blocked credits. Section 17(2) of the Act, reads as "where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-....
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....he above, they are of the understanding that food and beverages supplied to patients admitted in the hospital during the course of treatment forms part of health care services, which is exempt from payment of tax and therefore input tax paid on such food and beverages is not eligible for credit. PERSONAL HEARING / PROCEEDINGS HELD ON 30.07.2020 9. Sri Sanjay M Dhariwal, Chartered Accountant and duly authorised representative, appeared for personal hearing proceedings on 28.07.2020 before this authority and reiterated the submissions already made. Further, the learned representative has also stated that the applicant is making item wise billing i.e. bed charges, food charges, medicine charges etc. 10. DISCUSSION & FINDINGS: 10.1 We have considered the submissions made by the Applicant in his application for advance ruling as well as the submissions made by him when he appeared for the personal hearing. We have also considered the issues involved, on which advance ruling is sought by the applicant, and relevant facts. 10.2 At the outset, we would like to state that the provisions of both the CGST Act and the KGST Act are the same except for certain provisions. Therefore, unless ....
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....ntract for the supply of medicines which is independent of the supply of treatment services. Any medicines which are administered to the patient are a part of the treatment services and there is no separate supply of medicines to the patients. 10.7 Section 2 (30) of the CGST Act, 2017 provides for the definition of a "Composite supply" which reads as under: "(30) "composite supply" means a supply made by a taxable person to a recipient consisting of two or more taxable supplies of goods or services or both, or a combination thereof which are naturally bundled and supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply;" It is very clear from the above that to constitute a "composite supply" the supply should consist of two or more taxable supplies which are naturally bundled and supplied in conjunction with each other. In the instant case the supply of medicines is not a distinct supply and the medicines are consumed in the course of supply of treatment services and hence would not constitute a "composite supply" as there is only one supply and that is "treatment of ailment" which is a "health care service". If at all any m....
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....e applicant, with regard to the supply of medicines & other goods to the customers, is selling the medicines as a trader and hence they are liable to collect and pay the applicable tax on the goods sold and also is eligible to claim input tax credit like any supplier of taxable goods, subject to any restrictions in Section 17 of the GST Act. 10.12 Supply of food & beverages to the inpatients: The supply of food & beverages to the inpatients can happen in two ways i.e. prescribed diet in accordance with the treatment & food as per the request of the inpatient. Thus with regard to supply of food & other articles to the inpatients in the hospital, the question before us to decide is whether the said supply is a part of the health care services or not. If the supply of food & beverages is under the prescribed diet as part of the treatment process, and if it is an integral part of the treatment, then the food and beverages loses its identity as a separate supply and merges with the supply of treatment service similar to supply of medicines. Thus the impugned supply of food & beverages is an ancillary to the supply of treatment service i.e. health care service, which is an exempted sup....