In re Believers Church India (GST AAR Kerala)
In the matter of Believers Church India, the Kerala Authority for Advance Ruling (AAR) examined the applicability of GST on the supply of medicines, implants, and consumables provided by the hospital to patients, both admitted and non-admitted. Believers Church India, a charitable trust operating a multi-specialty hospital, submitted that such supplies—whether under fixed packages or charged separately—should be treated as part of a composite supply of health care services, which are exempt from GST under Entry No. 74 of Notification No. 12/2017-Central Tax (Rate). The hospital issues prescriptions and invoices, and patients may procure medicines either from the hospital or external pharmacies. The applicant argued that in all in-patient scenarios, such supplies are integral to the treatment and naturally bundled with the health care services provided.
The AAR upheld the applicant’s view for in-patient care, confirming that medicines and other supplies issued during the course of in-patient treatment, whether under full package, partial package, or billed separately, constitute a composite supply with health care services being the principal supply. Therefore, these are exempt under the GST law, even when the cost of supplies is substantial relative to the total bill. Similarly, for certain outpatient services such as dialysis, chemotherapy, and minor surgeries administered without formal admission, the ruling held that these also form a composite supply of exempt health care services, provided the supplies are naturally bundled and delivered within the hospital.
