Case Details : GST on medicines to patients- definition of composite supply and exemption
Case Related To : Kumaran Medical Centre
Declared By : Tamil Nadu- Advance Ruling on 29th July 2022
What Happened Exactly :
- The applicant is a Registered Partnership Firm, has a Multi-Speciality Hospital providing Health Care Services in Coimbatore.
- In order to provide healthcare services the applicant also maintains Pharmacy, Clinical Laboratory, X Ray & Scanning facility, Ambulance Services, Dietary Services etc.
- The applicant has stated that they have categorized the Patients as Out-Patients and In-Patients for their convenience.
- The Out-Patients are those who visit the Hospital for Routine check-ups, clinical visits and the Hospital provides diagnosis to them. Medicines are prescribed to them as part of treatment.
- Whereas the In-Patients are those who are admitted to the hospital for the required treatment. They are provided with stay facilities, dietary food for the treatment. They are also provided with medicines, drugs, stents, implants, other surgeries/ procedures etc. as incidental to the Health Care Services rendered in the hospital.
- Applicant seeks advance ruling as to whether the supply of medicines, drugs and other surgical goods to In-Patients. During the course of diagnosis and treatment of disease, illness, injuries, deformities and abnormalities would fall meaning of composite supply qualifying for exemption under the category of Healthcare Services.
Court's Decision :
- Health care services provided by a clinical establishment or an authorized medical practitioner or para medics are exempted vide Sl. No 74 of Notification no 12/2017-CT (rate) dated 28.06.2017.
- The applicant hospital is a Clinical Establishment and for the health care services provided to in-patients from admission till discharge including the supply of medicines, implants and consumables. They are exempt under Sl. No. 74 of Notification no 12/2017-C.T. (rate) dated 28.06.2017 as amended upto 17.07.2017; and subsequent to amendment, effective from 18.07.2022. The exemption is applicable for the health care services provided by them to in-patients only when the room (other than ICU/CCU/ICCU/NICU) charges do not exceed Rs.5000/- per day.
- If the room charges exceeds Rs. 5000/- per day then the applicable rate of tax for the health care services is 5% GST as per entry No. 31A of the Notification 11/2017-CT(rate) dated 28.06.2017 amended vide notification 03/2022 CT(rate) dated 13.07.2022 w.e.f 18.07.2022, subject to the conditions specified in Column (5) of the entry.
- The supply of medicines and consumables and service of consultation of out patients is not inextricably linked and not naturally bundled. Therefore, pharmacy run by hospital dispensing medicine to outpatient can be treated as individual supply of medicine and not covered under the ambit of health care services. Hence such supply of medicines and allied goods are taxable under GST at respective rates.
- The supply of implants which are fitted in the body by a surgical procedure in the course of diagnosis and treatment of illness for in-patients. It would fall under the ambit of Composite Supply with Healthcare being the principal supply and they are exempt under Sl.No.74 of Notification No. 12/2017-CT (rate) dated 28.06.2017, as amended.