In re Dr. Kamakshi Memorial Hospital Private Limited (GST AAR Tamil Nadu)
The case concerns an application filed before the Authority for Advance Ruling (AAR), Tamil Nadu, by a multi-speciality hospital providing healthcare services, including in-patient and out-patient treatment, diagnostics, surgeries, and allied services. The applicant sought clarification on whether the supply of medicines and consumables to in-patients through its in-house pharmacy forms part of a “composite supply of healthcare services” and qualifies for GST exemption under Notification No. 12/2017 – Central Tax (Rate).
The applicant stated that its in-house pharmacy functions as an integral part of the hospital and is primarily meant to serve in-patients. Medicines, surgical items, and consumables are supplied during the course of diagnosis and treatment as prescribed by doctors. These supplies are essential to patient care and are not treated as separate transactions. The hospital raises a consolidated bill at the time of discharge, which includes charges for room rent, consultation, diagnostics, procedures, and medicines. Separate tax invoices are not issued for medicines supplied to in-patients.
The applicant contended that such supplies are naturally bundled with healthcare services and are provided in the ordinary course of business. Accordingly, they argued that the supply qualifies as a “composite supply” under Section 2(30) of the CGST Act, 2017, where healthcare services constitute the principal supply and medicines and consumables are ancillary. Based on this, the applicant claimed that the entire supply should be exempt from GST under the relevant notification applicable to healthcare services.
