Case Law Details
In re CMC Vellore Association (GST AAR Andhra Pradesh)
GST Tax liability on the medicines supplied to In-patients through pharmacy and Tax liability on the medicines, drugs, stents, implants etc administered to in-patients during the medical treatment or procedure.
The applicant as stated in the application renders health care services to in-patients in the form of supply of medicines, drugs, stents, implants etc being administered during the medical treatment or procedure. Now we examine the issue at hand i.e., whether the above mentioned supplies to in-patients through pharmacy is liable to tax or not. Primarily the health care services provided by the applicant are exempt under SI.No. 74 Heading 9993 vide Notification no. 12/2017 -Central Tax (Rate) Date: 28.06.2017.
The health care services as explained in (zg) of para 2 of Notification no. 12/2017 -Central Tax (Rate) Date: 28.06.2017, defines service by way of diagnosis, or treatment or care for illness, injury, deformity, abnormality’ or pregnancy in any recognised system of medicines in India, In common parlance, when one looks into the definition, ‘the treatment or care extended by hospital can be thought of devoid of medicines, relevant consumable, or implants, by no stretch of imagination. The supply of medicines and the consumables are integral part of the treatment extended to the in-patients by the hospital. Hence, we are of the opinion that the services rendered by the applicant is a composite supply as defined under section 2(30) of CGST Act, 2017 in which the principal supply is health care, being predominant and the supply of medicines, drugs, implants, stents, and Other consumables, come under ancillary supplies and accordingly tax liability has to be determined under section 8 of CGST Act, 2017, Since the entry of “Services by way of -a) health cure services by a clinical establishment, and authorised medical practitioner or para-medics;” at SI.No. 74 Heading 9993 vide Notification no. 12/2017 -Central Tax (Rate) Date: 28.06.2017 is nil rated, the supply of medicines, drugs, implants, stents, and other consumables are exempted from liability under GST.
Even the Circular N0. 32/06/2018-GST (F.N0.354/17/2018-TRU) date: 12.02.2018 released on the approval of the CGST council 25th meeting clarifies the issue on the similar lines stating that the food supplied to in-patients is part of composite supply of health care and not separately taxable, whereas other supplies of food by a hospital to patients (not admitted) or their attendants or visitors are taxable. In this context, we arc of the opinion that the same principle is applicable to the medicines, drugs, stents, implants etc administered to in-patients during the medical treatment or procedure.
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