TaxTMI 
TaxTMI 
2026 (7) TMI 1334
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the SGST Act. 1. Brief Facts of the Case: 1.1 As per the facts available on records, the Appellant had filed an Application No. 03/2025-26 under Section 97(1) of the CGST Act, 2017 before the Authority for Advance Ruling (AAR) for the State of Uttarakhand on 27.06.2025. The Advance ruing application comprised the query/ seeking advance ruling as to:- a. Whether the operation and management of Government Urban Health & Wellness Centres (UHWCs) / Ayushman Arogya Mandirs and Polyclinics by the Applicant under identical Operation & Management Agreements with Braithwaite & Co. Limited (PSU-executing agency), funded exclusively through 15th Finance Commission health grants routed via Braithwaite and Company Limited and providing healthcare services to citizens free of cost, constitutes exempt "healthcare services by a clinical establishment" under Entry 74 of Notification No. 12/2017-Central Tax (Rate)? b. Whether, in the alternative, the said activities qualify as "pure services" provided to the State Government (through its designated PSU-execu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y the weaker and underserved sections of society. ii. That the Appellant is engaged in operating and managing Government UHWCs now renamed UAAM, and Polyclinics established under a public health programme funded through grants recommended by the 15th Finance Commission and implemented by the Government of Uttarakhand through its Urban Development Directorate ("UDD"), and the said programme is executed through M/s Braithwaite & Company Limited, a Government of India Public Sector Undertaking ("PSU"), acting as the designated Operating agency for implementation, administration and monitoring of the project. iii. That M/s Braithwaite & Company Limited, being a Government of India PSU functioning under the administrative control of the Ministry of Railways, Government of India, has been formally nominated by the State Government of Uttarakhand as the Operating agency for establishment, operation and monitoring of UHWCs now renamed UAAM, and Polyclinics under the said programme, and its role is confined to conducting tender processes, entering into operation and management agreements with healthcare operating agencies, coordinating implementation, monitoring performanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ards, strictly in accordance with the terms of the Agreement and directions of the operating agency. ix. That under the said agreement, the Appellant has been entrusted with the responsibility of operating and managing Government healthcare facilities including UHWCs now renamed UAAM, and Polyclinics, deploying qualified medical practitioners, specialists, paramedical staff and support staff as per Government-prescribed norms, and providing outpatient consultations, diagnostic services, medicines, preventive healthcare services, community health outreach programmes and referral services, strictly in accordance with Government guidelines and public health protocols. x. That the Appellant is required to operate the said healthcare facilities strictly in accordance with the directions, instructions, and guidelines issued by the UDD and other Government authorities from time to time under the said Government healthcare programme. xi. That all healthcare services provided at the said UHWCs now renamed UAAM, and Polyclinics are rendered entirely free of cost to the beneficiaries and no amount whatsoever is charged from patients or beneficiaries for consultation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s Tax law to obtain clarity regarding applicability of GST on the activities undertaken, particularly in view of interpretational issues arising from contractual clauses referring to tax, so as to ensure compliance and avoid future disputes or litigation, xvii. That in the aforesaid factual background, the Appellant had approached the Authority for Advance Ruling, Uttarakhand, under Section 97 of the CGST/SGST Act, seeking a ruling on the applicability of GST on the activities undertaken by it in relation to operation and management of Government UHWCs now renamed UAAM, and Polyclinics under the said Government-funded public healthcare programme, in view of interpretational ambiguities arising on account of the conduct of M/s Braithwaite & Company Limited, which, while acting as the executing agency, was deducting and withholding GST amounts from the payments due to the Appellant, despite the Appellant's bona fide understanding that the services rendered were exempt from GST; and since the financial bid submitted by the Appellant in the tender was premised on such exemption, resulting in minimal margins, the continued withholding of GST had a direct adverse financial impac....
X X X X Extracts X X X X
X X X X Extracts X X X X
....foresaid contentions of the Appellant and held that the services rendered by the Appellant are taxable, primarily on the reasoning that the contractual arrangement is between the Appellant and M/s Braithwaite & Company Limited, and that the consideration flows from the said entity, thereby treating the supply as a contractual service to a PSU rather than as healthcare services rendered to patients or as services provided to Government in discharge of public functions. xxii. That the Ld. Advance ruling Authority, while passing the impugned ruling, failed to appreciate that the nature of supply is to be determined based on the intrinsic character of the services rendered, i.e., provision of healthcare services through clinical establishments, and not merely on the contractual flow of funds or the identity of the intermediary entity through which Government grants are channelized, and further failed to consider that the Appellant is operating Government healthcare facilities as part of a public health system where services are rendered free of cost to beneficiaries. xxiii. That the Ld. Advance ruling Authority further erred in not appreciating that the role of M/s Br....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., employer, insurer, or Government scheme, the payment is not made by the recipient himself, yet the service does not cease to be healthcare service or lose its exemption merely because the money comes from another source. Likewise, in Government hospitals or other public healthcare institutions, treatment is often rendered free of cost or funded through insurance or public schemes, but the healthcare character of the service remains unchanged. The legal test is always the end use and true nature of the service, not the identity of the payer. On the same principle, the present case of the Appellant cannot be treated differently merely because the grant/payment is routed through the Operating Agency under the public health implementation structure. Such an interpretation adopted by the AAR is therefore patently artificial, contrary to the statutory scheme, and leads to absurd consequences. In the present case as well, the Appellant is admittedly engaged in providing healthcare services to patients through Government health facilities under a public health programme, and the routing of funds through an executing agency is merely a mechanism for implementation of the scheme. The ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tablishment, an authorised medical practitioner or para-medics." A.4 That, the term "clinical establishment" in the CGST Services Exemption Notification must be interpreted consistently with the CE Act, which provides the statutory definition and framework. This interpretational principle follows from: a. Harmonious construction: Two statutes operating in the same subject matter (healthcare regulation) must be read harmoniously. b. Statutory reference: When the CGST Services Exemption Notification uses "clinical establishment," it implicitly incorporates the CE Act definition. A.5 That, Para 2(zg) of the CGST Service Exemption Notification defines "healthcare services" as: "health care 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng that the Appellant is administering and maintaining such clinical establishments within the meaning of the said Act; the Appellant had placed on record before the Learned Authority all relevant documentary evidences including registration certificates, agreements, scope of services, and operational records demonstrating provision of healthcare services; the same position was reiterated and explained during the course of personal hearing on 29.01.2026, however, despite such uncontroverted evidence and categorical satisfaction of the statutory definition, the Learned Authority has erroneously disregarded the same and denied the status of the Appellant as a "clinical establishment," which is ex facie contrary to the facts on record and the express provisions of law. Copies of the Registration Certificates issued by the competent District Registration Authority/Office of the Chief Medical Officer, Haridwar, are annexed hereto and enclosed as Annexure-H. A.8 That in regard to the above, the ratio laid down in Re: Arden Health Care Private Limited (Advance Ruling No. KER/131/2021 dated 18.02.2022) squarely applies to the facts of the present case, wherein the Hon'ble Authority cate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he classification of the services as healthcare services. A.10 That the above position also finds judicial support in the ruling of AAR Karnataka in Re: Matrix Imaging Solutions (Advance Ruling No. KAR ADRG 105/2019 dated 30 September, 2019), wherein the Authority held that diagnostic services provided to hospitals or other establishments are still covered under Entry 74, and specifically observed that the exemption entry does not prescribe any condition regarding the identity of the recipient. Accordingly, once it is established that the supplier is a clinical establishment and the services rendered are diagnosis, treatment, or care, the exemption cannot be denied merely because the payment flows through an intermediary or institutional arrangement rather than directly from the patient. A.11 The CESTAT in Life Care Hospital Ltd. v. Commissioner of CGST and Central Excise (2024 SCC ONLINE CESTAT 883) held that a clinical establishment providing health care services falls within the exemption under Notification No. 25/2012-ST, and that receipts connected with in-house treatment, including medicines supplied to patients and the processing of Mediclaim claims, are part of the co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ugned Ruling is accepted, it would lead to manifest inequality and defeat the very object of the exemption granted under the GST framework. The legislative intent behind exempting healthcare services is to ensure that such essential services remain affordable and accessible to all sections of society. In the present case, the UHWCs now renamed UAAM, and Polyclinics have been established by the Government precisely with the objective of providing free-of-cost healthcare services to economically weaker and underserved sections of society under a public health mandate. However, under the erroneous interpretation of the Ld. Advance Ruling Authority, merely because the consideration is routed through M/s Braithwaite & Company Limited, the executing agency, the services are sought to be subjected to GST. This would directly result in depletion of the limited Government healthcare budget, thereby reducing the extent and quality of services that can be provided to the ultimate beneficiaries. A.14 The Ministry of Health and Family Welfare, in its official FAQ on GST, has categorically stated that the healthcare sector has been exempted from GST because the Government has accorded healthc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ucing such inequality, defeats both the statutory intent and the larger public health objective underlying the exemption. B. ERRONEOUS MISCHARACTERIZATION OF HEALTHCARE SERVICES PROVIDED BY THE APPELLANT AS TAXABLE MANAGERIAL OR SUPPORT SERVICES B.1 That the Ld. Advance Ruling Authority has erred in law and on facts in holding that the operation and management of UHWCs now renamed UAAM, and Polyclinics do not constitute "healthcare services," without appreciating the true nature and substance of the activities undertaken. B.2 The services rendered by the Appellant form an integral part of a comprehensive primary healthcare delivery system established under the 15th Finance Commission framework, encompassing outpatient consultations, maternal and child healthcare, screening of non-communicable diseases, and essential diagnostic services. B.3 That all activities performed at the said centers, from patient registration to clinical diagnosis and treatment, are intrinsically linked to the provision of medical care and are directly aimed at diagnosis, treatment, and care of illness, thereby falling squarely within the ambit of "healthcare services" as defined under the CGST S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he characterization of the Appellant's services as mere "operation and management" or taxable managerial services is erroneous and unsustainable, as it disregards the essential clinical nature of the services and the Appellant's responsibility towards medical outcomes and patient care. B.9 In Union of India v. Wood Papers Limited reported in (1990) 4 SCC 256 = 2002-TIOL-454-SC-CX), it was pointed out that an exemption notification should be construed strictly at the threshold. But once the exception/exemption is applicable, then a liberal construction must be adopted. The Hon'ble Supreme Court has reiterated that: ""4. Entitlement of exemption depends on construction of the expression "any factory commencing production" used in the Table extracted above. Literally exemption is freedom from liability, tax or duty. Fiscally it may assume varying shapes, specially, in a growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with the specific objective etc. That is why its construction, unlike charging provision, has to be tested on different touchstone. In fact an exemption provision is like an exception a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equivocally demonstrate that the Appellant is not merely a contractor or intermediary, but is directly engaged in the provision of healthcare services through duly qualified medical professionals forming part of its organizational structure. C. ERRONEOUS AND UNDULY RESTRICTIVE INTERPRETATION OF THE TERM "RECIPIENT" LEADING TO MISAPPLICATION OF SECTION 2(31) OF THE CGST ACT, 2017 C.1 The Ld. Advance Ruling Authority has fundamentally erred in holding that M/s Braithwaite & Co. Ltd. is the "recipient" of services merely on the ground that it disburses payments to the Appellant. This conclusion is based on an incomplete and mechanical application of Section 2(93) of the CGST Act, without appreciating the broader statutory framework and the factual matrix of the transaction. The AAR has failed to consider that Braithwaite has been appointed as an operating agency by the State Government under the 15th Finance Commission framework and performs only an administrative and financial channelising function, operating strictly within the Government-approved grant structure. It neither consumes nor benefits from the healthcare services rendered by the Appellant and therefore cannot be tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s, in the present case, even if payments are disbursed by M/s Braithwaite & Co. Ltd., the real and substantive recipients of the healthcare services are the patients/beneficiaries availing diagnosis, treatment and care at the UHWCs now renamed UAAM, and Polyclinics, and the Government which has entrusted the Appellant with the discharge of public health functions; therefore, the impugned ruling, which equates the payer with the recipient without examining the true nature of supply and the end-use of services, is legally untenable and contrary to the express statutory scheme. The AAR, by ignoring these provisions, has incorrectly equated the payer with the recipient and has thereby misapplied the statutory definition. C.5 The factual matrix clearly demonstrates that the actual recipients/beneficiaries of healthcare services are the patients who visit the UHWCs, now renamed UAAM, and Polyclinics for diagnosis, treatment, and preventive care. The Appellant provides comprehensive healthcare services directly to such patients through qualified medical professionals, and all services are rendered free of cost, with no charges levied at any stage. Braithwaite does not receive, consume,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....livery models where: Government agencies, insurers, or employers fund healthcare services, and patients receive services without direct payment. The MoU/Agreement clearly show that the Appellant operates within a grant-based funding model, with payments linked to public health objectives and subject to utilization certificates and audit requirements. Such structures inherently involve separation between payer and beneficiary. The AAR's reasoning, if accepted, would render all such models taxable, which is contrary to both legislative intent and administrative practice. C.11 Without prejudice to the submissions, reliance is placed on CBIC Circular No. 190/02/2023-GST dated 13.01.2023, wherein the Board has categorically clarified that incentives paid by the Government (MeitY) to acquiring banks under the RuPay/UPI scheme are not consideration for any supply made to the Government, but are "in the nature of subsidy directly linked to the price of the service", and therefore do not form part of the taxable value in terms of Section 2(31) read with Section 15 of the CGST Act, 2017. C.12 The relevant clarification expressly records that even where payment is made by the Government....
X X X X Extracts X X X X
X X X X Extracts X X X X
....proach is contrary to both the express provisions of Sections 2(31) and 15 of the CGST Act as well as the binding clarification issued by the CBIC. C.16 It is a settled position in law that Circulars issued by the CBIC are binding on the departmental authorities, and the Ld. Advance Ruling Authority could not have taken a view contrary to the clarification issued therein. The failure to apply the ratio of the said Circular vitiates the impugned ruling. C.17 Reliance is placed on the judgment of the Hon'ble Supreme Court in Collector of Central Excise, Patna vs Usha Martin Industries Ltd. reported in (1997) 94 ELT 460 (SC), wherein it has been categorically held that the Revenue cannot be permitted to take a stand contrary to the instructions issued by the Board, and while an assessee may challenge such instructions, the Department is bound by them. C.18 That the Ld. Advance Ruling Authority has erred in its interpretation and application of Circular No. 190/02/2023-GST and has proceeded on an incorrect factual and legal premise in holding that the payments received by the Appellant from M/s Braithwaite & Co. Limited constitute consideration arising out of a contractual obl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....side the scope of supply, valuation, and taxability under the CGST Act. The finding of the Ld. Advance Ruling Authority proceeds on a fundamental misunderstanding of the statutory provisions as well as the nature of the transaction. D.2 That it is a settled position of law that GST is leviable only on "supply" in terms of Section 7 read with Section 9 of the CGST Act, and the value of such supply is to be determined in accordance with Section 15 of the CGST Act. Further, as per the definition of "consideration" under Section 2(31) of the CGST Act, any subsidy given by the Central Government or a State Government is expressly excluded from the ambit of consideration. Similarly, Section 15(2)(e) of the CGST Act also excludes subsidies provided by the Central or State Government from the value of supply. Thus, amounts in the nature of Government grants or subsidies are statutorily kept outside the scope of taxation under GST. D.3 That the word "subsidy" is not defined under the CGST Act. Accordingly, reliance is placed on the dictionary meaning of the same and as defined under other acts, so as to understand the scope and nature of the said term. According to the Black ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the view that the present case involves change of opinion. In this connection, it must be noted that Government grants different types of subsidies to the entrepreneurs. The subsidy in Sahney Steel and Press Works Limited (supra) was an incentive subsidy linked to production. In fact, in Sahney Steel and Press Works Limited (supra) [at page 257], this Court categorically stated that the Scheme in hand was an incentive Scheme and it was not a Scheme for setting up the industries. In the said case, the salient features of the Scheme were examined and it was noticed that the Scheme formulated by the Government of Andhra Pradesh was admissible only after the commencement of production. In Income Tax matters, one has to examine the nature of the item in question, which would depend on the facts of each case. In the present case, we are concerned with power subsidy whereas in the case of Commissioner of Income Tax v. Ponni Sugars and Chemicals Limited, reported in [2008] 306 I.T.R. 392, the subsidy given by the Government was for re-paying loans. Therefore, in each case, one as to examine the nature of subsidy." D.7 Similarly, in Indian Oil Corporation Ltd. v. Kerala State Road Tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he meaning of the term "subsidy". Here, it is seen that the term "subsidy" has not been defined under the CGST Act, 2017. In such case, we will have to resort to the dictionary meaning of the term "subsidy". Meaning of "Subsidy" as per the "Merriam-Webster" Dictionary : a grant or gift of money : such as - a :a sum of money formerly granted by the British Parliament to the crown and raised by special taxation; b :money granted by one state to another; c :a grant by a government to a private person or company to assist an enterprise deemed advantageous to the public. Meaning of "Subsidy" as per "dictionary.com": a direct pecuniary aid furnished by a government to a private industrial undertaking, a charity organization, or the like; a sum paid, often in accordance with a treaty, by one government to another to secure some service in return; a grant or contribution of money; money formerly granted by the English Parliament to the crown for special needs; 21. On perusal of the aforesaid dictionary meanings of the term "subsidy", it is apparent that any money/amount granted by a governmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al Government, will not be subject to the levy of GST. D.10 That applying the ratio of the above judgements to the present facts, the funds received by the Appellant originate from Government grants sanctioned under the 15th Finance Commission framework for the specific purpose of strengthening public healthcare infrastructure through UHWCs, now renamed UAAM, and Polyclinics. The said amounts are not in the nature of commercial consideration for any independent supply, but are financial support extended by the Government to enable implementation of a public welfare scheme. The mere routing of such funds through an executing agency does not alter their essential character as a government subsidy. D.11 That it is pertinent to note that the character of a subsidy is to be determined based on its purpose and intent, and not on the nomenclature or the mechanism of disbursement. In the present case, the entire funding is earmarked for providing free healthcare services to the public at large, which is a function intrinsically beneficial to society and squarely falls within the domain of Government welfare activities. Accordingly, such grants clearly qualify as "subsidy" in substanc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....evidencing that all components are intrinsically linked and form a single supply. E.2 It is submitted that the bundle of services provided by the Appellant is naturally bundled in the ordinary course of business of operating healthcare facilities. Healthcare delivery necessarily involves a combination of: Medical Consultation, Diagnostic Testing, Supply of Medicines, Nursing and Paramedical Support, Use of infrastructure and equipment. The documents demonstrate that the Appellant provides preventive, promotive, curative, rehabilitative, and palliative care, along with free drugs and diagnostics as part of a unified healthcare framework. These components cannot be separated without destroying the essential character of the service. The AAR has failed to recognise this inherent bundling and has incorrectly treated each component as an independent supply. E.3 That under Section 2(30) of the CGST Act, "composite supply" means two or more naturally bundled supplies supplied in conjunction with each other in the ordinary course of business, one of which is a principal supply. Section 2(30) of the CGST Act, which defines composite supply, is reproduced below: (30) "composit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s ensures standardized medical reporting, disease surveillance, and continuity of patient care, which are hallmarks of a structured healthcare delivery system. E.7 Section 8 of the CGST Act clearly provides that the tax liability on a composite supply shall be determined in accordance with the principal supply. Once it is established that healthcare service is the principal supply, the entire composite supply must necessarily take on the tax treatment applicable to healthcare services, which are exempt under Entry 74 of the CGST Services Exemption Notification. The AAR has disregarded this statutory mandate and has instead artificially segregated the components of the supply, which is impermissible in law. The AAR has erred in law by artificially dissecting the supply and misclassifying it as operational services. The impugned finding is thus unsustainable and liable to be set aside. E.8 Without prejudice to the above, the reliance placed by the Ld. Advance Ruling Authority on rulings relating to manpower supply or hospital management services is wholly misplaced and distinguishable on facts, as in those cases, the supplier was not itself a clinical establishment providing di....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been specifically designated as the operating agency for the implementation of UHWCs now renamed UAAM, and Polyclinics under the 15th Finance Commission framework. F.2 The relevant entry is reproduced below for reference: SI.No. Chapter, Section, Heading, Group or Service Code (Tariff) Description of Services Rate (per cent.) Condition (1) (2) (3) (4) (5) 3 Chapter 99 Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution. Nil Nil The relevant extract of the Article is reproduced below for your perusal: "243W. Powers, authority and responsibilities of Municipalities, etc. Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow- a. the Municipalities with such powers and authority as may be necessary to enable them to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....intendment but regard must be had to the clear meaning of the words. The entire matter is governed wholly by the language of the notification. If the tax payer is within the plain terms of the exemption it cannot be denied its benefit by calling in aid any supposed intention of the exempting authority". F.4 The principle relating to the interpretation of notification was again considered and enunciated by the Hon'ble Supreme Court in the case of Mangalore Chemicals & Fertilizers Ltd. v. Dy. Commissioner reported in 1991 (55) ELT 437 (SC) wherein the Hon'ble Supreme Court held as follows:- "It appears to us the true rule of construction of a provision as to exemption is the one sated by this Court in Union of India & OINR Vs. Wood Papers Ltd., & Ors (1991 JT (1) 151 at 155)" ..... Truly, speaking liberal and strict construction of an exemption provision are to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... dispensaries. The term "in relation to" is interpreted by the Courts in various judicial precedents. F.8 Reliance is placed on the judgement given by the Hon'ble Supreme Court in the matter of State of Karnataka v Azad Coach Builders Pvt. Ltd. & Anr (2010 (262) E.L.T. 32 (SC)) wherein it was held that the phrase "in relation to" is comprehensive and not restrictive. The relevant portion of the judgement is reproduced below: "The expression in relation to' are words of comprehensiveness, which might both have a direct significance as well as an indirect significance depending on the context in which it is used and they are not words of restrictive content and ought not be so construed." F.9 Further reliance is also placed on the ruling given by AAR, Gujarat in the matter of in Re: Ahmedabad Municipal Transport Service (Advance Ruling No. GUJ/GAAR/R/13/2021 dated January 27, 2021), wherein it was held that the term 'in relation to' is very wide and the intention of the legislature is to encompass all those services which are provided so as to enable the organization to perform function entrusted in Article 243W of Constitution of India. "70. We find that the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....specifically "public health" as enumerated under the Twelfth Schedule; thus, the Appellant's activities form an integral part of the State's public healthcare delivery mechanism, executed through a Governmental framework, and therefore clearly fall within the plain language and scope of Entry 3, entitling the Appellant to exemption, which has been erroneously denied in the impugned ruling. F.11 It is respectfully submitted that the impugned ruling is contrary to the clarification issued by the CBIC in Circular No. 51/25/2018-GST dated 31.07.2018, which directly covers and supports the case of the Appellant. The relevant extract of the circular is reproduced below for reference: Service Tax GST SI. No. 2: (i) Health care services by a clinical establishment, an authorized medical practitioner or para-medics; (ii) Services provided by way of transportation of a patient in an ambulance, other than those specified in (i) above. Sl. No. 74: Services by way of- (a) health care services by a clinical establishment, an authorized medical practitioner or para-medics; (b) services provided by way of transportation of a patient in an ambulance, oth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cipal Corporation qualify as "pure services" and are exempt under Entry 3 of the CGST Services Exemption Notification. F.18 Reliance is also placed on the Advance ruling in Re: Ex-Servicemen Resettlement Society (WBAAR 22 of 2025-26 dated 10 December 2025), wherein it was held that security and scavenging services provided to Government medical colleges and hospitals qualify as "pure services" and are exempt under Entry 3 of the CGST Services Exemption Notification. The Authority found that since the applicant supplied only manpower (wages, statutory dues, bonus), the first condition of "pure services" was satisfied. It further held that Government hospitals constitute the State, and that such services are intrinsically connected with public health, sanitation, and hospital functions under Articles 243G and 243W, emphasizing that the phrase "in relation to" has a wide ambit and covers even ancillary/support services essential for running hospitals. Accordingly, even though the services were not core medical treatment, they were treated as integral to public health functions and hence exempt. F.19 The Government of India's order dated 25.11.2023 expressly renames the AB-HWCs a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....appreciate the true nature of the transaction, the status of the recipient as a Government Entity, and the wide scope of the expression "in relation to" as consistently interpreted by the Hon'ble Courts. The Appellant's activities are integrally connected with the discharge of public health functions entrusted under Article 243W and are executed within a government-controlled framework without any commercial character. Once the Appellant is found to fall squarely within the plain language of Entry 3, the benefit of exemption cannot be denied by adopting a narrow or artificial interpretation. Accordingly, it is most humbly prayed that the impugned ruling, to the extent it denies exemption under Entry 3, be set aside, and it be held that the services provided by the Appellant are exempt from GST under the CGST Services Exemption Notification. F.23 That in view of the facts of the case, contractual framework, statutory provisions, and judicial principles discussed hereinabove, it is evident that the Appellant is engaged in providing healthcare services through Government-owned clinical establishments, which are squarely covered under Entry 74 of the CGST Services Exemption Notifica....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sideration' given under Section 2(31) of CGST Act, 2017 it does not affect to ascertain the nature of service that the consideration is paid by the patients or another person. • That the Appellant is duly registered as a 'clinical establishment' as per Annexure-H attached to the Appeal. • That the case laws including the case of Sir Ganga Ram Hospital vs Commissioner of Central Excise (2018 (11) GSTL 427 (Tri .- Del.)) are already referred to in the Grounds of Appeal in support of their case. • That the Hon'ble Supreme Court in Government of Kerala v. Mother Superior, Adoration Convent (Civil Appeal No. 202 of 2012, decided on 01.03.2021) has laid down the authoritative principle for interpreting exemption notifications. • That the GST is not leviable on subsidy as any 'subsidy' given by the Central Government or a State Government does not amount to consideration as per Section 2(31) of CGST Act, 2017. The Appellant is received the payment from grant of Government of Uttarakhand through "Executing Agency" i.e. M/s Braithwaite & Co. Ltd. (PSU). • That reliance is placed on CBIC Circular No. 190/02/2023-GST dated 13.01....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... contract/LOI refers to "applicable GST" or "taxes as applicable", does not alter the legal position in the present case. The taxability or exemption of a supply under the GST regime has to be determined strictly in accordance with the provisions of the CGST Act, 2017, the Uttarakhand GST Act, 2017, and the exemption notifications issued thereunder. A contractual clause cannot either create a tax liability where none exists under law, or take away a statutory exemption otherwise available to the Appellant. A2. The expression "applicable GST" or "taxes as applicable" is, by its very nature, conditional and contingent upon the GST law. It only means that GST shall be charged if, and only if, GST is legally applicable on the supply in question. If the supply is exempt under Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, then the applicable rate of GST is nil, and no contractual reference to taxes can convert an exempt healthcare supply into a taxable supply. A3. In the present case, the state-PSU MoU itself defines the contract price as inclusive of "applicable GST, and taxes payable", and further records that the entire proceedings are to be carried out within th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the Government's own public policy position is consistent with the exemption claimed by the Appellant. The Government has reiterated that healthcare services provided by doctors, hospitals and diagnostic centres continue to remain exempt under the existing GST regime, and that recent GST reforms are intended to promote affordable healthcare and reduce treatment costs. Levying GST merely because a public healthcare contract mentions "taxes as applicable" would defeat the very object of the exemption. It would create an anomalous and irrational result: substantially similar healthcare services supplied by private hospitals, clinics or diagnostic centres would remain exempt, whereas healthcare services supplied free of cost to poorer and underserved sections of the public through Government-funded UHWCs/Ayushman Arogya Mandirs and Polyclinics would be taxed merely because the Government has implemented the programme through an executing PSU. A8. Without prejudice, even if the arrangement is viewed as a composite supply involving infrastructure, manpower, diagnostics, medicines and operational elements, the principal supply remains healthcare service. Section 2(30) of the CGST Act....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es. The court reasoned that the petitioner has failed to indicate any notification issued under Section 9 of the Act, which imposes discharge of GST liability on the respondent under the Reverse charge Mechanism (RCM). In the absence of any statutory basis to impose GST liability on the recipient, the same cannot be imposed as per the private agreement between the parties. The above conclusion can be derived from the following paragraph of the judgment. "6. The petitioner has failed to indicate any notification issued under Section 9 of the Act having application to the contract in question and therefore, the plea sought to be 6 raised based on the agreement between the parties cannot be countenanced. The indication made in the agreement between the parties can be enforced by the petitioner against respondent no.3, however, insofar as respondent State is concerned, the liability to pay the GST is that on the supplier i.c. the petitioner and therefore, the plea raised in this regard has no substance." A13. Reliance is also placed on the case of State of Karnataka as Unique Constructions, cited at 20.26 KHC:28028-DB, where the Hon'ble Karnataka High Court held that the co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mance of the project. B2. At the outset, it is submitted that M/s Indovation Healthcare LLP itself is the operating agency appointed for the operation, implementation and monitoring of the urban Heath & wellness Centres, now renamed as Urban Ayushman Arogya Mandirs, and Polyclinics in the Garhwal region. The Appellant has not sub-let or outsourced the core healthcare services to any third-party agency. The responsibility to operate the healthcare facilities, deploy medical and paramedical personnel, ensure availability of functional clinical infrastructure and provide healthcare services to the public rests directly and exclusively upon the Appellant. B3. It is further submitted that the UHWCs/UAAMs and polyclinics operated by the Appellant qualify as clinical establishments, being facilities where diagnosis, treatment, consultation, nursing care, medicines, diagnostics, referral services, preventive care, curative care and allied healthcare services are provided through duly appointed medical practitioners and paramedical staff. The Appellant has also produced clinical establishment registration certificates issued by the competent District Registration Authority / Chief Med....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Offer letter for Appointment of a Medical Officer (MBBS) at UHWC, sent to one of the appointed candidates of the Appellant with Bank payment records, has been marked and annexed as Annexure A. Copy of the Offer letter for Appointment of a Staff Nurse (GNM) at UHWC, sent to one of the appointed candidates of the Appellant with Bank payment records, has been marked and annexed as Annexure B. B8. The appointment letters, salary records and bank-payment documents further establish that the medical and nursing personnel are directly engaged and remunerated by the Appellant. Therefore, the Appellant is not merely supplying manpower or coordinating healthcare activities; it is itself operating the clinical establishments and rendering healthcare services to the public. Illustrative activity Manner in which it is performed Position of the Appellant Operation of UHWCs/Ayushman Arogya Mandirs and Polyclinics The centres are operated and manged by the Appellant I accordance with Government guidelines Direct operator of the clinical establishments Appointment of doctors and nurses Medical Officers, Staff Nurses and other personnel are appointed through off....
X X X X Extracts X X X X
X X X X Extracts X X X X
....res, maintains the clinical establishment infrastructure and ensures delivery of healthcare services. Accordingly, the services must be regarded as healthcare services rendered by the Appellant itself as a clinical establishment, eligible for exemption under Entry No 74 of Notification No. 12/2017-Central Tax (Rate). B12. In view of the above, the Appellant is the actual provider of healthcare services, and the exemption cannot be denied on any assumption that the services are rendered by some third-party agency on behalf of the Appellant 5. Discussion & Findings. 5.1. The Appellant has contended that the services provided by them may be considered either in terms of Entry No. 74 of the Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 as "Health care services by a clinical establishment"; OR in terms of Entry No. 03 of the said Notification as "Pure services" provided to the Government in relation to function under article 243W of the Constitution. 5.2. In this present matter, in the impugned order dated 17.03.2026, the AAR found that the operation and management of Government Urban Health & Wellness Centres (UHWCs) / Ayushman Arogya Mandirs and Polyclinics....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thwaite & Co. Limited or the Government. 5.5. We also observe that 'Services' and 'Scope of Work' are mentioned in the Agreement dated 27.09.2025 made between M/s Braithwaite & Co. Limited and M/s Indovation Healthcare LLP which is being reproduced as below:- "General Terms-Conditions and definitions ---------------------------------------------------------------------------------- --------------------------------------------------------------------------------- vi. 'Services' mean the deliverables that are set out on the scope of work defined in the order placed on Limited Tender and this agreement. 3. Scope of Work. The Operating Agency shall be responsible for ensuring that each Urban Health & Wellness Centre (UHWC) and Polyclinic is equipped with the necessary infrastructure, human resources, and functional capabilities to deliver quality healthcare services. 1. Infrastructure Development a) Urban Health & Wellness Centres (UHWCs) The Operating Agency shall: * Establish designated spaces for registration and waiting areas, OPD and consultation rooms, pharmacies, treatment and injection areas, co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rogya Samitis (MAS) to raise awareness and refer high-risk cases to the appropriate healthcare facilities * Disease Surveillance & Early Warning: Implement real-time tracking of diseases and establish early warning systems for timely intervention. * Wellness & Preventive Care: Promote lifestyle counselling, mental well-being programs, and addiction awareness initiatives to enhance public health outcomes. 3. Human Resource Requirement: Each UHWC shall have a dedicated team responsible for service delivery, training and coordination. I. Human Resource for One UHWC Type of Staff No. Required Medical Officer (New Recruitment) 1 Staff Nurse (New Recruitment) 1 One MPW (male) (New Recruitment) 1 Guard (outsourced) 1 Cleaning Staff (Outsourced) 1 Total 5 II. Human Resource for Polyclinics Type of Staff No. Required Specialist each Medicine, Obstetrics & Gynaecology, Paediatrics, Ophthalmology, Dermatology and Psychiatry 6 Dentist (May be one fixed days) 1 Staff Nurse (New Recruitment) 2 Optometrist 1 Physiotherapist 1 Integrated Counsellor 1 Multipurpose Work....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... medical treatment. It is a bundled activity comprising; clinical services, diagnostics services, pharmaceutical services, public health and outreach activities, facility management, human resource deployment, monitoring and reporting. Thus, we observe that the contract is for comprehensive operation and management of healthcare facilities, rather than a mere supply of manpower or a standalone healthcare consultation service. 5.7. Now the question under consideration is whether the services provided by M/s Indovation Healthcare LLP may be treated as exempt either in terms of Entry No. 74 of the Exemption Notification No. 12/2017-CT (Rate) dated 28.06.2017 as "health care services by a clinical establishment" or in terms of Entry No. 03 of the said Notification as "Pure services" provided to the Government in relation to function under article 243W of the Constitution. 5.8. We observe that Entry No. 74 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts: (a) "health care services by a clinical establishment, an authorised medical practitioner or para-medics". Further the Notification in its definition at clauses 2 (s) and 2(zg) defines 'clinical es....
X X X X Extracts X X X X
X X X X Extracts X X X X
....UHWC-Part-1). Accordingly, the Agreement dated 27.09.2025 has been made between M/s Braithwaite & Co. Limited and M/s Indovation Healthcare LLP. Thus, the role of M/s Braithwaite & Co. Ltd. being 'executing agency' is limited to implementation and administration of the Government project and does not alter the nature of the services supplied by the appellant. The project documents placed on record clearly establish that the Urban Health and Wellness Centres (UHWCs) and Polyclinics are established for delivery of comprehensive primary healthcare services under the Ayushman Bharat Health and Wellness Centre (UHWC)/ 'Ayushman Arogya Mandir' project of Government of India. On going through the 'Scope of Work', we observe that it includes OPD consultations, maternal and child healthcare, management of communicable and non-communicable diseases, referral services, diagnostics, dispensing of medicines, specialist consultations, telemedicine support and public health interventions. We also note that the appellant has submitted a "Provisional Certificate for registration of Clinical Establishment" [as Annexure-H to the Appeal] which has been issued by the Chief Medical Officer, Haridwar on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y-Haridwar (attached as specimen as Annexure-I to the Appeal). We further observe that in this case the dominant purpose of the agreement is therefore healthcare delivery. Administrative, managerial, reporting and operational obligations appearing in the agreement are incidental and ancillary to the principal objective of healthcare service delivery. The relevant Sections of the GST Act are reproduced below:- "Section 2(30) - "Composite Supply" "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 any 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 Section 2(90) of the CGST Act - "Principal Supply" Section 2(90) defines principal supply as: "Principal supply" means the supply of goods or services which constitutes the predominant element of a composite supply and to which any other supply forming part of that composite supply is ancillary; Section 8(a) - Tax Liability on Composite Supply Section 8(a) provides th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....purpose of determining their taxability; rather, they must be assessed in accordance with the essential and dominant nature of the arrangement, which is intrinsically linked to the provision of healthcare services. 5.16. We observe that the AAR in its findings placed undue emphasis upon the contractual payment structure. For the limited purpose of Section 2(93)(a) of the CGST Act, 2017, the person liable to pay consideration, namely Braithwaite & Co. Limited, may be regarded as the recipient of the supply. Section 2(93) of the CGST Act defines the "recipient" primarily for identifying the person to whom a supply is made and for fixing statutory rights and obligations under the Act. However, determination of taxability and classification of the supply cannot rest solely upon the identity of the payer. The true nature, substance and objective of the contract, the activities actually performed, and the ultimate purpose for which such activities are undertaken are equally relevant considerations. 5.17. We note that the Hon'ble Karnataka High Court in M/s Healthcare Global Enterprises Ltd. v. Assistant Commissioner of Commercial Taxes (Enforcement), Bengaluru (WP 22236 of 2023. CW....