In re Krishna Institute of Medical Sciences Limited (GST AAAR Andhra Pradesh)
Administering of COVID-19 vaccine by hospitals is a composite supply and liable for GST at 5%
The AAAR, Andhra Pradesh in the matter of M/s Krishna Institute of Medical Sciences Limited [Order No. AAAR/AP/07(GST)/2022 dated December 19, 2022] upheld the order of the AAR wherein it was held that the administration of COVID – 19 vaccine is not an exempted supply as it is not covered under the definition of ‘healthcare services’. Further held that, it is a composite supply wherein the principal supply is the ‘sale of vaccine’ and the ancillary supply is the service of ‘administering of vaccine’ and liable to Goods and Services Tax (“GST”) at 5%.
Facts:
M/s. Krishna Institute of Medical Sciences Limited (“the Appellant”) is a public limited company and a multi-specialty hospital providing healthcare services and claiming exemption on the said service under the Advance Ruling No. AAR No.04/AP/GST/2022 dated 21.03.2022 (“Services Exemption Notification”). The Appellant also makes pharmacy supplies to outpatients, which is taxable and it accordingly remits taxes on the same.
The Appellant was permitted to administer COVID-19 vaccines and hence, it had approached the AAR, Andhra Pradesh seeking clarification on exemption on administering vaccines under the Central Goods and Services Tax Act, 2017(“the CGST Act”), wherein, the AAR vide Advance Ruling No. AAR No.04/AP/GST/2022 dated 21.03.2022(“the Impugned Order”) ruled that, administering the vaccine by clinical establishments does not qualify as “Healthcare services” and is not eligible for exemption as per the Services Exemption Notification. Further, administering COVID-19 vaccines is a composite supply, where the principal supply is the ‘sale of vaccine’ and the ancillary supply is the service of ‘administering of vaccine’ and the total transaction is taxable at 5% GST.
Being aggrieved, this appeal has been filed by the Appellant contending that, the AAR in the Impugned Order, had erred in interpreting the basic fact that the person receiving the vaccine is not buying it, but rather going to the hospital to get it served through vaccination and there is no actual transfer of goods and one vial of vaccine contains multiple doses and one such dose is injected and the recipient of such dose is called to be served and not the owner of the vaccine. Further, the healthcare services are exempted by way of Sl. No. 74 of the Services Exemption Notification and under HSN Code 9993 12 healthcare service includes prevention of physical and mental diseases and the sole objective of the vaccines are to prevent a dreadful disease.
Issues:
1. Whether administering of COVID- 19 vaccination by hospitals is supply of goods or service?
2. Whether administering of COVID-19 Vaccine by hospitals qualify as “Health care services” as per the Services Exemption Notification and are exempt from GST liability?
Held:
The AAAR, Andhra Pradesh in Order No. AAAR/AP/07(GST)/2022 of 2022 held as under:
