Healthcare Global Enterprises Ltd Vs Assistant Commissioner of Commercial Taxes (Karnataka High Court)
GST Exemption on Healthcare Services Available Even When Rendered Through Another Hospital Under Revenue-Sharing Arrangement: Karnataka High Court
The Karnataka High Court held that healthcare services provided through a revenue-sharing arrangement between two clinical establishments continue to enjoy GST exemption under Sl. No. 74 of Notification No. 12/2017-Central Tax (Rate) dated June 28, 2017. The Revenue had sought to levy 18% GST by classifying the petitioner’s share of revenue received from another hospital as taxable “Support Services” under SAC 9985. Rejecting this approach, the Court observed that the predominant nature of the transaction was the provision of medical treatment to patients through qualified doctors, specialists, technicians and para-medical staff. Relying upon the exemption notification and CBIC Circular No. 32/6/2018-GST, the Court held that healthcare services cannot lose their exempt character merely because they are rendered through another hospital under a contractual revenue-sharing model. It further ruled that the Department cannot indirectly tax an activity that is directly exempt under law. Since the impugned show cause notices lacked jurisdictional basis, the Court exercised writ jurisdiction and quashed the notices issued under Section 73 of the CGST Act, 2017.
