TaxTMI 
TaxTMI 
2022 (7) TMI 403
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....e Applicant) are registered under GST with GSTIN 33AAECB5775C1ZW.The applicant has sought Advance Ruling on the following questions: 1. Whether the Supply medicines and consumables used in the course of providing health care services to In-patients by pharmacy unit of Be well hospitals for diagnosis or treatment during the patients admission in hospital would be considered as "Composite Supply" of health care service as under GST and consequently avail exemption under Notification No.12/2017-CT (Rate) read with Section 8(a) of GST? 2. Whether the supply of medicines and consumables used In the course of providing health care services to out-patients by pharmacy unit of the Be well hospitals for diagnosis or treatment would be considered as "Composite Supply" of heath care services under GST and consequently avail exemption under Notification 12/2017 CT (rate) read with Section 8(a) of GST? The Applicant has submitted the copy of application in Form GST ARA - 01 and also submitted a copy of Challan evidencing payment of application fees of Rs.5,000/- each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017. 2.1 The applicant has stated that ....
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....nd-the-clock pharmacy, diagnostic and ambulance services. The specialised emergency care services provided by Applicant includes: Multiple fracture injuries, Burns, Poisoning, Snake bites. ii. Preventive Health care: Performing regular health check ensures a happier life for the individuals. Support in early detection of worrying changes if any at all, and addressing them with quick interventions. The Applicant has states that they have a range of health check programs right from the basic to the advanced and also have specialised ones for women and geriatric people. Health Checks Diagnostic tests related to health checks Basic Health Check up Blood Group, ECG, X-ray Master Health Check up Blood group, KFT, Lipid profile LFT, ECG, X-ray. USG Abdomen Cardiac Health Check up BKFT, Lipid profile, Na K+, ECHO, X-ray. HbA1C Women Health Check up Blood group, KFT, LFT Lipid profile, ECG, X-ray, TSI smear, USG Abdomen Diabetic Health Check up KFT, Lipid profile ACR, HbA1C Microalbuminuria Senior citizen Health Check up Blood group, KFT, lipid profile LFT, ECG, X-ray, Abdomen, Urinary incontinence screening test. iii. Multis....
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....ork together providing service to both inpatients and out-patients regardless of their speciality though there is division of time between in-patient and out-patient services. Since medicines and other allied items supplied to in-patient forms part of composite supply of health care services, accordingly similar supply of medicines and other allied items supplied to out-patients shall also constitute a composite imply. The applicant has stated that there is no clear distinction between in-patients and out-patients in GST law for the purpose of levy, since the nature of supplies service providers are same in case of both inpatients and out-patients there should not be any differences for the purpose of levy of GST based on duration of stay of the patients in clinical establishments. Further, it is also pertinent to mention that the definition of health care service as well as clinical establishment under Notification No. 12/2017 CT (Rate) dated 28.06.2017 issued under CGST Act, 2017 do not impose any specific restriction or condition to grant GST exemption only for IP patients. They have submitted that out patients do not buy medicines voluntarily without prescriptions. It is being ....
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....clubbed together to constitute composite supply. Further, the clubing of the Supplies may be considered for valuation purposes and not for the purpose of altering the nature of the supply, findings in relation to composite supply must take into account supplies effected at a given point in time on "as is where is basis". • TamilNadu Advance Ruling Authority in M/s Royal Care Speciality Hospital Ltd it was held that - "Medicines, Consumables and implants used in the course of providing healthcare to inpatients by the applicant is a composite supply of inpatient services classifiable under SAC 999311" 2.5 The applicant has also submitted that the supplies of medicines and consumables used in the course of providing health care services to out-patients by pharmacy unit is a composite supply of health care services. The applicant has made references to the definition of Healthcare services, clinical establishment under the Notification 12/2017. The applicant has also placed reference on the definition of composite supply and mixed supply under the GST Act. The applicant has compared the supplies made by them with definition of composite supply as below to ascertain whet....
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....al Hearing in Digital media. The applicant consented and the hearing was held on 19.01.2022. The Authorized Representative Mr. Harish & Mrs. Shraya Shree appeared for the hearing and reiterated the submissions. The CGST Member asked the AR the following questions: i. whether the pharmacy is only for in/out patients of the hospital or is it open to General public as well. The AR replied that it is open to general public too. ii. whether separate accounting/stock is maintained with respect of in patients and out patients. The AR replied that its all mixed up and no separate stocks are maintained. The State Member asked the AR whether it is mandatory for the out patients to buy from in house pharmacy. The AR replied that it is not mandatory. The applicant was asked to submit the following documents: 1. Flowchart showing full sequence of admissions, diagnosis, treatments and discharge along with the billing for same for a sample in patient 2. Documents supporting the full sequence of treatment extended to the out-patients along with supporting billing. 3. Modus of operation of pharmacy- whether separate accounting/stock is ....
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....another notice dt.31.03.2022 was issued to the applicant vide RC No.779/2021 dt.31.03.2022 requiring them to submit documents supporting full sequence of treatment in respect of each and every one of their clinical establishments. Further vide their letter dt.11.04.2022, the process of treatment extended to out patients and In-patients was furnished without documentary evidences. Hence, the applicant was required vide letter dt.19.04.2022 to furnish 1. Bills raised by in-house pharmacy in respect of Medicines along with the consolidated bill raised on in-patient; 2. Bills raised by in-house Pharmacy for consumables used by in-patients supporting with the consolidated bill raised on the in-patient; and 3. Bills raised by in-house pharmacy on out-patient who avail consultation (registered with the clinic establishment as OP) 4. Details of the current practice followed as to whether the supplies are considered as composite supply or otherwise and the rate of GST at which the Patients (both in-patient and out- patient) are charged. 3.4. In response the applicant vide their letter dt.25.04.2022, submitted the relevant bills and submitted that they ....
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....from GST. It has been stated that the supply of taxable goods and service like 'medicines and consumables' used in the predominant supply of 'health care service', is found to be in the form of composite supply as defined under Section 2(30) of the CGST Act, 2017 and the predominant supply of 'health care service' is classified as exempted supply in terms of Notification no. 12/2017, as the said 'composite supply appears to be exempted supply under GST Act. (ii) In respect of out-patients, it has been stated that CBIC vide Circular no.32/06/2018-GST dt. 12.02.2018 has clarified that 'other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. Therefore, medicines and consumables used in the course of 'health care services' to out-patients are not eligible to avail exemption under Notification no.12/2017 read with Section8(a) of the GST Act. 5. The State jurisdictional authority has stated that no proceedings are pending relating to the applicant. 6. We have carefully examined the submissions of the applicant in their application, their oral and written submissions during the P....
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....ient. The patients are treated for the illness or injury for which they are admitted. During the process of providing health care services, the patients are also provided medicines, regular health monitoring, foods, implants etc. In-patients are billed on a composite basis for Hospital service & Pharmacy consumables& Medicines and so GST is not charged for pharmacy items issued to them. They are currently treated as part of Composite supply. (ii) Out-patients consultancy: The patients visit the hospital to avail consultancy related to his/her health. Doctors may prescribe some sample blood test, scans etc., to investigate the illness in detail. The patients can purchase the medicines prescribed by the Doctors at the hospital pharmacy or from any other outside pharmacy of their choice. Out patients are charged GST as per the item category as mentioned in their supplier invoice. They are currently treated as separate supply. 7.2 The health care services rendered to In-patients is first taken up for discussion. On perusal of documents submitted by the applicant, it is observed that in-patients are provided with stay facilities, medicines, consumables and other surgeries/pr....
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....uying the medicines or consumables and using on themselves. Therefore, supply of medicines and consumables to in patients in the course of their treatment till the patient is discharged is a composite supply of health services. However once the patient is discharged, the composite supply comes to an end and the review of the patient subsequent to discharge cannot be considered as part of the composite supply. 7.4 This view is strengthened by the Circular No 32/06/2018-GST dt 12.02.2018 which is given below: (2) Healthcare services have been defined to mean any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognized system of medicines in India [para 2(zg) of notification No. 12/2017-CT(Rate)]. Therefore, hospitals also provide healthcare services. The entire amount charged by them from the patients including the retention money and the fee/ payments made to the doctors etc., is towards the healthcare services provided by the hospitals to the patients and is exempt 7.5 The 'Explanation to classification of services' states: SAC 9993 Human Health and social care services 99931....
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....der 2(s), which states that "Clinical Establishment" means a 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, abnormality or pregnancy in any recognized system of medicines in India or a place established as an independent entity or a part of an establishment to carry out diagnostic or investigative services of diseases. And 'health care services" is defined under 2(zg) as: (zg) "health cure services" means any service by way of diagnosis or treatment or care for illness, injury, deformity, abnormality or pregnancy in any recognised system of medicines in India and includes services by way of transportation of the patient to and from a clinical establishment, but does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or to reconstruct anatomy or functions of body affected due to congenital defects, developmental abnormalities, injury or trauma; From a joint reading of the 'Explanation of service' pertaining to 'Inpatient services' and the exemption ab....
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....ther in respect of hospital unit said to be situated at Virudhunagar, no bills have been furnished. In respect of hospitals situated at Tuticorin, Pharmacy bill has been issued from the hospital situated at No.5a, Vijayaraghava Road, T.Nagar, Chennai, which goes to prove that the medicines were not necessarily sold from the same hospital where the consultancy service was rendered. The details of invoices submitted in respect of the hospital situated at Tuticorin are as follows: Sl.No Patient details Bill for consultation & Place of supply Pharmacy bill & Place of supply 1 Uthira kani TUT-OPB-CA-023447/08.04.2022 Tuticorin. Medicine has been prescribed at Tuticorin Hospital UH ID no.TUT-34605 TUT-Sal 036236/ 08.04.2022. Bill raised by pharmacy at No.5A, Vijayaraghava road, T. Nagar, Chennai. UH ID no.TUT-34605 2 Marieshwaran TUT-OPB-CA- 023443/08.04.2022 Tuticorin. Medicine has been prescribed at Tuticorin Hospital UH ID no.TUT-32347 TUT-Sal 036234/ 08.04.2022. Bill raised by pharmacy at No.5A, Vijayaraghava road, T. Nagar, Chennai. UH ID no.TUT-32347 8.3 In the case of in-patients, the hospital is expected to provide provide lodging, care, med....
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....ring the course of provision of health care services, as defined in Para 2 (zg) of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended and Notification No.II (2)/CTR/532(d-15)/2017 vide G.O. (Ms) No. 73 dated 29.06.2017 as amended and the same is exempted from CGST and SGST as per SI No 74 of the above notifications respectively. 2. Supply of Medicines and consumables used in the course of providing health care services to Out-patients admitted to the hospital for diagnosis, or medical treatment or procedures is not a composite supply and is hence taxable to GST. ============= Document 1 Patient Category 0000 HMS-Patient Registration (OP/IP) Collect the patient Details (Name,Age, Sex, Refr Dr Name, Mobile Number, Address, Pincode, Company Name*) Be Well Hospitals Generate UHID Walk In Patient New Register Patient, Create visit Old Patient (Get UHID Name Mobile No) Create Visit OP Cash Bill Process New Patient Register Patient, Create visit Choose Sponsor Name Emp Nuniber Corporate Insurance Gld Patient UHD,Name,Mob No] Create visit OP Cr Bill Process HMS OP-Billing Process 000....